Skinflint's City Diary

How shrewd young Nephew Wilde was to sell out his portfolio before the devastation in the stock market last Thursday. If only he had gone in for short selling, say, double the number of shares that he held. Even though he didn't I suspect that a few people did and if there is a recovery during this week leave it alone as there will be a lot of covering going on. I know that friends in the City will not thank me but I still feel that the market is too high and that a switch into gilt-edged will prove rewarding. I like yearlings but mediums are probably better. War Loan is there for the hardened gambler and where money will be made when the folly of Competition and Credit Control policy finally gets through to the very thick trio, Mr Barber, Mr Walker (more to blame than anyone because the Prime Minister listens to his bad advice) and the quite hopeless Mr Chataway, trying to understand a job quite beyond his powers.

Legislation wanted

Hardly a year passes without a financial debacle like that of London and County Securities. There was the State Building Society, Theo Davies Investments, Pin flock Finance and IOS The common thread through these collapses has been the use of depositors' funds for speculation by the principals.

Peter Walker is tinkering with the law ottering a weak wishywashy Companies Bill. It is quite useless. We want fewer words like 'cumbersome' and 'self regulation' and 'City tradition,' and greater attention to 'theft' and 'churning' and 'warehousing' and 'bribing of institutional managers.' We should simply import the Securities and Exchange Act and make it into British law, toning it down, certainly not much, later. Peter Walker is a difficult man to understand. He has a City background but always on the lower rungs until he met Jim. Slater. He had virtually 'nothing to do with the building up of the Slater Walker Group though he was suddenly enriched just before becoming a Minister by the consolidation of his 25% shareholding in his little insurance broking business within the Slater Walker insurance satellite. He got a few, hundred thousand and so far as 1, know has none of the few shares he previously held in SWS. This association gave him a quite undue reputation for financial acumen. and grasp of the intricacies of finance. He is a decent chap and believes that everyone else is a decent chap too. He must get some people together with narrow, suspicious, jealous, prying natures

and arm them with investigative powers and some hard legal muscle and put them to work to clean up the mess already there and start digging up the bodies. It is not insider trading that he should fob us off with but an investigation of the relationship between merchant banks and the funds they control. When a rights issue fails, who really is leaded with the shares? How have some of the recent big takeovers for cash been financed? Did the socalled banks involved have apreements to share in profits? Have unit trust funds been used for warehousing and for the dangerous game of market support during bids? Have private charitable trust funds been used for activities involving the personal ventures of a settlor?

Peter Walker is in danger of losing the reputation he gained unearned for vigour and courage. A really strong and independent establishment for City control would show that he has the stuff of a possible leader of his party. If he fluffs this I fear that he will go down as another old woman dithering about in public.

VAT advantage

You probably know that one of the benefits that the continental tax authorities found when they introduced value added tax was that it encouraged the most laggardly tax payers, like journalists, to keep books of account in order to claim back the tax they had paid out on purchases. It has occurred to me that if VAT was charged on all moneylending and property transactions, even if only at a minor rate, it would bring many transactions before the eye of Customs and Excise, so very much more baleful and less patient than the Inland Revenue..The Customs and Excise have the power without warrant or court order to enter your house or office and search around or take away your account books, Apparently they are able to call at your bank, ask for the manager, flash a card that they carry and ask for your account. 1 am far from sure that this is a proper state of affairs but so long as it is permitted it might as well be used to catch the thieves that loiter in the parlours of merchant banking and the Stock Exchange.

London Weekend

Looking at the results of London Weekend Television it is scarcely a surprise that the Minister of Posts and TeTecommunications, John Eden, is considering, rather tardily it might be said, additional taxation on commercial TV based on profits not on turnover. Just get these figures from their accounts to the end of July. Profits of nearly £6 million. Take from this the levy of only £2.7 million and there still is a pretax total of £3.1 million plus another £400,000 odd on a property deal. The directors took £61,000 between them. John Freeman got £14,238. Someone else — Cyril Bennett at a guess — had £15,288. Peter McNally got a good bite, say

£12,000 odd, and the other eleven apparently had under £2,500 each which, one has to confess, seems reasonable, since taking every cook and bottlewasher amongst the employees in London Weekend — 1,098 souls — drew an incredible £3,862,937. £3,518 each on average, indicating that John Freeman is taking his socialism' rather too seriously, ignoring Phase 3 or indulging in the greatest orgy of patronage since James the First. If John Eden acts as indeed he should (he will be the only Conservative minister doing anything at all about anything if he does) it must be both on turnover and profits. Acting on profits alone will give London Weekend's overpaid jeunesse d'oree yet another reason to approachtheir oversympathetic and yielding Chairman for more.

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peclor December 15, 1973 was only one way that shares could react in the face of a recession, and that they did with a vengeance. Now my broker tells me that the City is ablaze with

rumours of financial disasters and all those spivvy fringe merchant banks that financed property speculators must be carrying out stringent internal audits. The whole set-up looks so much like a pack of cards, in fact, that the risks of investment in equities are

too great for me to contemplate returning to this market for some time. I think I shall a least wait until the gilt market begins to look stronyer.

Meantime with my surplus cash, 1 am looking avidly for the most lucrative medium of invest ment. Last week I did go to the Coin Exhibition at Olympia but prices have reached such absurd levels that this area seems just as speculative as stocks and shares.

What I have exanined, however, is a scheme of Williams and Glyn's Bank, called the Nest Egg Plan. It has distinct advantages, providing a high return while also giving life insurance coyer to the extent of

180 times the amount deposited each month. A £12 a month policy

can build up a total saving in ten years of £1,875 tax-paid while monthly savings of £15 or more, because of lower insurance costs, can raise the return to 12 per cent.