Monica Sutherland. (Cape. 12s. 6d.) ALTHOUGH La Fontaine does not
present the same difficulties for foreigners as Corneille and Racine, he seems to have had less attention in this country than almost any of the great French writers of the seventeenth century. There have been plenty of transla- tions of the Fables, but Mrs. Sutherland's is the first full-length study to appear in English. She tells us that French scholars have done their work so thoroughly that she cannot offer any new material. Her book is a pleasant, well-written, unpretentious intro- duction to the poet's life and work, and she gives an attractive portrait of the man. La Fontaine was such a consummate artist in verse that it is a pity that Mrs. Sutherland was so anxious to avoid what she calls " philological criticism." But her com- ments on the Fables that she does discuss are sensible, and her book will encourage the general reader to repair a gap in his reading.
M. T. Budget Prospects In any event, Mr. Butler should not allow himself to be influenced either by the Oppo- sition or by the Stock Exchange in deciding what level of interest rates is best for the national economy faced with the reality of the present orthodox American recession. Nor should he listen to the bankers. The counsel given by the bank chairmen in their speeches was as divided as their dividend policy. Individually they had many shrewd observations to make but collectively they were only agreed upon one point—that the level of taxation was too high. It would be difficult to disagree on that issue. Here Mr. Butler might go for advice to President Eisenhower. The Republican leader is adopting most of the Keynesian devices to counter the current recession. He is making use of cheaper money to further a housing drive, he is preparing a programme of public works, and he is lowering taxation. But being a " sound money " Republican and not a Democrat he is not allowing this to increase the Budget deficit—he is reducing Government expenditure to keep pace with the reduction in taxation. (This is the only part of his counter-recession measures that would have shocked Keynes.) And how is he reducing expenditure ? By ctitting down the defence estimates—by realigning defence
INVESTMENT
DAVENPORT so as to spend more on air and atomic weapons and less on costly battleships and land forces. Mr. Churchill has already darkly hinted that he is engaged on the same course. Mr. Butler should follow up this " martial " aid to his Budget with all his powers of persuasion. If defence expenditure and taxation were lowered'he could cheapen money and start a great drive—not for more houses, which have already reached their peak of economic production—but for industrial investment, for the modernisation of our industrial plant and equipment which will enable us to compete more efficiently with our rivals in the export trade.
'Convertibility Barred One piece of advice offered by one or two of the bank chairmen and by some of the Dominions Mr. Butler would do well to reject—that is, on the convertibility of sterling. It would be madness to cut down industrial investment for the sake of building up our gold reserves for that operation, as Mr. Butler did in 1952. An American recession would not allow the world more dollars but less and no Chancellor in his senses would again blindly give the foreigner, who is short of dollars, a chance of exchang- ing pounds freely for dollars. It is clear from the Randall Commission report that the United States is not going to lower its tariffs at once to help Britain make its pound convertible : it is not even going to offer a big stabilisation loan : it is merely recom- mending that the International Monetary Fund and Bank use their resources to help nations striving for currency convertibility.
Company Notes
By CUSTOS
AFTER the flurry of the chairmen's speeches the proprietors of the joint stock banks are left with shares returning not very attractive yields ranging from £4 3s. per cent, to £4 8s. 6d. per cent. (on the fully paid). If an investor were tempted to buy MIDLAND and WESTMINSTER because their directors might relent and pay a higher dividend next year he would not find much encouragement in the remarks of their chairmen who con- sidered it to be in the best interests of their banks that the inner reserves should be strengthened before dividends were raised. MARTINS and the DISTRICT may be more interesting, as their fully paid shares yield around 41 per cent., but against bank shares as an investment class it must be said, first, that the upward trend of banking costs has not yet come to an end, second, that the lowering of interest rates last autumn is now exerting more pressure on their earning power, third, that a recession in this country might bring still lower interest rates and more bad debts. I might also add, looking at their boards of directors, that banks are subject to politics to'a much greater extent than ordinary commercial companies.
FOR investment appreciation insurance shares are obviously preferable to those of
Cr.qinued on page 13f
By NICHOLAS
THERE is no doubt that Mr. Butler's hand- ling of the internal finances of the country has been extremely adroit. The offer this week of 31 per cent. Conversion stock 1969 to holders of the maturing 2/ per cent. National War Bonds 1952-54 (of which about £412 millions are outstanding) pleased everybody in the City—even the bankers. To extend the maturity dates of short-term debt without giving too much away in the coupon is sound Treasury practice. A yield of £3 I Is. 9d. per cent. for a fifteen-year stock made some of the medium-dated issues (with higher yields) rise in the market, which will prepare the way for the coming issues of Dominion and Colonial loans recommended at the Sydney Conference. The balance of the old Budget seems to be emerging better than was expected a month or so ago and if the key-note of the new Budget is to be the encouragement of industrial investment, as it should be, there is no reason why Mr. Butler should not advise the Bank to lower Bank rate to 3 per cent. I believe this would have been done before now if industrial shares had not been rising so fast on the Stock Exchange under the pressure of higher dividends, bonuses and bids. The excitement which an active Stock Exchange causes in Left political circles, that is, when Labour is in Opposition, is out of all relation to its economic importance. When Labour is in power, and money is being made cheap by a Socialist Chancellor, a Stock Exchange boom hardly causes a murmur of protest. Indeed, it is interesting to observe that even after the recent rise the Financial Tinies index of industrial shares (134 as I write) is still short .of the peak of 140 attained in the so- called Dalton boom. But by the time the Budget is due the Stock Exchange may well have discounted the industrial recovery of 1953, so that there will be less risk then of adding fuel to the security fires if Bank rate is lowered.
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