SKINFLINT'S CITY DIARY

I was delighted when that hard-working nice chap Christopher Chataway became Minister of Posts and Telecommunications on the formation of the Conservative Government, and I am not surprised that he made mince- meat of the Opposition in Monday night's nuttily conceived censure debate on the sacking of sad Lord Hall. Let's hope that the Conservatives do not now fall into the same trap as their opponents when the Patronage Secretary at the Treasury went to the mer- chant banks and the City for candidates for so many State jobs. I remember years ago young Lord Elveden telling me that Chris- topher Chataway was highly thought of by them at Guinness's when he worked there for a time before entering Parliament. He

will know. by now. that th•-• cPninr executives

he met in well-run businesses like Guinness's are incomparably better at putting together a management structure, setting objectives and working with a high degree of economy towards organic growth than any Sir Kenneth Keith, Gordon Richardson or David Montagu. These bankers are con- cerned with money and their function, let us admit it, is the taking of commissions' from

nTlei their redeployment and not much more. They have only the haziest idea of what is meant by management; more in how to cut their losses quickly and to re-invest elsewhere.

Soon I shall address a note to the Patron- age Secretary at the Treasury with some suggestions knowing full well that they will be ignored.

Chataway only won his Chichester seat in 1969, and his adoption against the popular public-spirited local candidate and expert on Local Government Barry Rose, a former constituency chairman, was in the main due to the active help of a local pig-farmer and

retired RAF officer "Buster" Briggs. As Chataway progresses, I hope that "Buster" Briggs will be remembered by more than the occasional warm note and the odd day's pheasant shooting he is at last getting at Stansted Park, the seat of the constituency president, Lord Bessborough.

Conglomerate reform

It is a peculiarity of our time that crises sim- mer but do not boil though the troubles in the unit trust movement and the possibly inter-connected self-feeding Stock Market slide are taking a serious toll of con- glomerates. May I suggest some immediate steps with which no reasonably minded person will quarrel unless he is already locked into a vulnerable position on bor- rowed money: 1) Conglomerates (the definition here is any company wishing to build up by share exchange) should be required to publish three-monthly accounts.

2) Conglomerates should be separated from fund, unit trust or investment trust management. They should not be able to get their hands on any deployable funds for which they have a fiduciary responsibility.

3) Conglomerate auditors should show share dealing profits unscrambled and apart from trading profits. This would mean that any profits generated through Stock Ex- change activity would be shown separately with a statement of accounting principles.

4) Conglomerates' strategic holdings should be withheld the use of nominee names.

5) No loans to Directors to buy their own shares by 'merchant banks' with which the conglomerate has deposits or any dealing.

Moves along these lines would show how firmly a conglomerate's share price reflected its intrinsic worth and stop 'free form' from profiting at the expense of smaller or lazier shareholders from what amounts to a chain letter deception.

Pragmatic promotion

When the young are being led to believe that the modern equivalent of Samuel Smiles is the business school, it is good to hear the story, for which I can vouch, about the important American, whose name I had better not mention, but whose great food manufacturing business in England is a household word. He has the sort of fortune that the late Lord Beaverbrook would have described as serious money, that is, a capital position in excess of $30 million. The business has been built up year after year— for he is not a young man—by organic growth, the promotion of new products and that systematic attention to small detail which is characteristic of so many great American businesses. He has never had. I am sure, anything to do with the Harvard Business School nor is he the sort of claw- fist who might be described as having made money by not spending it.

He recently visited one of his factories nearralidciti1O—Tio—Old the kid of -thinks

that he liked to hear. Volume was better, costs down. profits up. The only small cause for concern apparently was the retirement, prematurely, of the Personnel Director—an important man who had served for many years and had been used to working frugally with little help. The General Manager said that advertisements had been placed in the press appointments pages. Executive Search Services had probed rival companies without success. The shrewd old entrepreneur nodded and pointing across the offices to a silvery haired, distinwished old man who happened to be still a junior shipping clerk after thirty years or so, and that it is the first company in new Personnel Director', which in spite of protests he still is and doing fine.

Go-go-going

A young man I met started a good little business producing year after year more than enough to show steady growth and to satisfy his personal convimption. He was approached by one of the newly formed go- go holding companies who unsucce-cfully tried to persuade him to join their group.

They used the usual arguments about 'ex- panding the business.' provision of capital', 'financial advice'. 'centralised services' and such rubbish. Failing with all these, they provided the final thrust by saying 'You know situations like ours are good for two years or so, and that it is the first company in that makes the most money by getting in before the main share price rise and out before the institutions'.