MONEY
Great Britain Limited
Nicholas Davenport
A new account opened on the Stock Exchange without the shake-out that had widely been expected in the eeuity market. There is a close battle going on between the ' bulls ' and the 'bears.' When the FT index of thirty industrial shares recently touched 500 — 64 per cent above its low point of 305 in March 1971 — the bears ' said that the advance had been too steep and that it was time to get out. Nonsense, said the bulls,' a major 'bull' market usually lasts over twenty-four months and we are only halfway through. But, said the bears,' if you take the FT Actuaries index of 500 shares, which bottomed at the beginning of June 1970, we are already three-quarters of the way through. My reply to both is that their historical comparisons are misleading. There has been a revolution in investment practice. Institutional funds are now in the hands of young 'go-go' managers who have to show performance success to their boards of directors. They are much quicker off the mark in the investment race than their predecessors. They backed Mr Heath's ' quiet revolution' and when they were told by the economists of the London and Cambridge Economic Service that 1972 can be the first of four years of rapid growth,' and then by the Bank of England that Mr Barber's reflation had done much 'to lay the foundations for a period of strong economic growth,' they were not slow to throw all their funds into the equity market. So they were responsible for the over-quick 64 per cent rise. Now I expect them to take some profits and perhaps bring the market back while the coal crisis lasts, but they will certainly not abandon the 'bull' tack for good.
What has not been generally appreciated is that these 'go-go' managers of institutional funds on the Stock Exchange have their counterparts in the business world outside. I know at least a dozen millionaires — in the thirty-to-forty age groups — who have gone into industry by taking over dud, derelict and dying concerns, sacking their sleepy managements and redundant labour, stripping their assets and concentrating production on the most profitable lines. The Heath government has unleashed the energies of these dynamic young men by reducing their personal taxation and making it worth their while to stay in this country and make their fortunes. This they can now do seeing that the economy is being reflated in no uncertain terms. But it means that they intend to produce more goods with fewer workpeople. Unemployment will therefore be slow to come down.
According to Mr Heath the nation did produce slightly more last year with 400,000 fewer workers. This was only a beginning. Not many years ago an American business consultant, the late William Allen, called Britain ' a half-time country' because its gross national product could be turned out, he said, with about half its existing labour force if it had efficient management and co-operative trade unions. The total working population was then a little over 26 million; it is now under 254 million. The great labour lay-off which is taking place involves, of course, a lot of hardship which has been properly alleviated by increasing unemployment pay and redundancy payments and by enlarging training schemes for the young (see Mr. Carr's scheme this week) but in the end the workers saved and securely employed can look forward to shorter hours and doubled pay. If they had any brains the trade union leaders would co-operate with the new young managers who can produce the goods and make Britain boom. If they prefer to throw their lot in with Tariq All's and Teresa Hayter's oldfashioned revolution they will back the losing side. The British bourgeoisie are far from decadent.
When unemployment and our industrial future are discussed in the House of Commons the daily Hansard reads like a page from The Spectator a hundred years ago, as Tom Puzzle will no doubt agree. Members seem completely out of touch with modern business with its go-go managers and new techniques. Last week they debated the Gas Bill and each side accused Spectator, February 5a 10 The state has already a 50 per cent the nationalised industries did not el°' that the Gas Board should stick to devv denly strike oil! It is typical of doctriaar, monopolies — coal, electricity and gas° and create a huge new bureaucracy te Sir John Eden, Minister for IndustrY, slier go whoring after the oil business. BeL'oi it or not, the row broke out because ling for gas in the North Sea, might they should want to set up another fcrl'o! est in British Petroleum which can be as its agent for oil and gas drilling ail Gi Lever said that the Government hatedlo: Coal Board and the Gas Board, bai'dii become partners in one or two oil rigs cud' Labour that having set up three eae it. The Tory government is right to st°Pte. the other of being doctrinaire. So were. Neither side was realistic. Mr Haiti public enterprise and really wished 1.5, economical system of gas supply " and,Aq instructed to hand over its gas to the oping 'an efficient, co-ordinated allc,
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Board on suitable terms. Fat Labour in office did not even see te-: energy monopolies avoided compeditsic one another. Each Board set up exP. ' showrooms for example, to sell beat'—(4: private homes in competition. The,hif. Board spent a fortune on advertising speed gas ' from the North Sea ito ridiculous slogan because this nlecto gas, having a higher calorific valtle,,i be used at a slower burning seeeu'obl nationalised Boards to call in trendY Pes: relations firms to help sell themselileof the public as up-to-date business P when in fact they are hidebound bYloaci o of Parliament and smothered in thet`o a of bureaucracy has always seemed to be the height of absurdity. , Observe the rigid unimaginatIv'a they handle their labour. Of cours'e'g labour leaders are also unimaginativoi when wage negotiations are in the toti of two boneheaded protagonists suffers. Take the case of the coal °lot z, The miners are fine, tough men baije tremely stubborn and under the in'es, perhaps of anarchistic Marxists thirli;1. prepared to let some hundred tor pounds worth of machinery be cod' and the crumbling coal faces oblitera4 that fewer miners will be en1P10Y,, future. A sensible young manager..,ip, not state-controlled would write To t off the Coal Board's debt and WictA saving of the absurdly high interest ay. r( screw up a little more cash to Poll, n miner the extra price of his stubb:ore e and get him back to work becomes murderous.
It has long been my contention 55 cannot run a mixed economy linhiefc,i P lines of demarcation between Pu'AlefiT private sectors are more clealrY s'agY 0 Mr Harold Wilson refused to do 5°:cr('/ a courage the public sector to P upon the private by stealth. Mr14°40. „,0 refuses to do so and does the °Y; The growth of the economy auffe:plii hb result. I suggest that the five-YearW, ments of elderly bureaucrats as "Ici of the nationalised industries sh°11,,IciP Let us try out — for shorter Pe'po° some of the young 'go-go' manag:e are capable of bringing industrial o!' into the twentieth century, let Europe. that'. e
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