FINANCE AND INVESTMENT
By CUSTOS •
APART from a further fall in insurance shares, stock markets have taken the Beveridge plan remarkably well. Not that the City is completely satisfied with the contents of this Report. It is not. It would like to postpone judgement until such time as we know more about the national income than we do now. That, in turn, depends to a great extent on the kind of peace we are going to have and the position this island is going to occupy in post-war international trade.
BEVERIDGE MILLIONS
As for the narrower issues involved, the effect of the extra expenditure on the level of interest rates and industrial profits, the implications do not seem to me to be at all frightening. The estimated cost of the scheme would represent at the outset in 1945, at £697,000,000, just over ro per cent, of a national income of £6,5oo,000,000, rising at the end of zo years—on the basis of an unchanged national income—to rather more than 13 per cent. It seems to me to be incontrovertible that if this proportion of our total resources can be relied on to prevent extremes of want, it should be applied to this end and not to less essential purposes. Nor need the employers' contribution in itself impose any serious burden on industrial finances or on the consumer. The addition to total cost of production is small. One is left with the insurance companies with a large " industrial " business as the chief victims of this ambitious scheme. Even here, I feel that the blow, if it falls, will not be so heavy as many seem to fear. Undertakings like the Prudential and the Pearl are capable of developing their remain- ing business, which is already quite considerable. So far as dividend prospects are concerned, the interest on the huge accumulated invest- ments should be sufficient to prevent any sharp reductions during any transition period.
The fact that goods made of raw materials in short supply owing to war conditions are advertised in this journal should not be taken as an indication that they are necessarily available for export.
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