Skinflint's City Diary
American recession
The South African revaluation of the rand this week poses more problems for the unhappy dollar, and the even more unhappy President Nixon. The dollar has again fallen steeply in relation to the Deutschmark, and gold has risen in price by US $6 an ounce. In the last three weeks the value of gold on the free market has gone up by a quarter, and the whole question of dollar-gold relations is again in the melting pot. The American Treasury Secretary says he is puzzled by the fact that, while a falling dollar should improve the US international monetary position and thus have a good effect on the domestic economy (as the floating pound has helped Britain), there is nonetheless every expectation of a recession in America by the end of the year. Mr Schulz really should have more sense: it is monetary uncertainty (not to mention chronic political instability caused by talk of impeachment) that damages investment, and President Nixon's apparent willingness, in his talks with M. Pompidou, to consider returning the dollar to the position of responsibility it once occupied among the worlds currencies makes American businessmen see the dangers that might yet lie ahead. If the Americans were sensible they would simply forget all this tarradiddle about monetary reform, float the dollar, and say they were going to leave it like that.
Covent Garden
I am delighted to see that the Covent Garden Community Association is straining every muscle to stop Metropolitan Estates Property Corporation and Reed Inter national from going ahead with their dreadful plan to put an office complex of 300,000 feet on the Odham's Press site in the centre of Covent Garden. The fact that the complex is to be designed by the dreaded Richard Seifert should be enough to make everyone shudder. One of the reasons why the Government is unwilling to listen to petitions against the scheme is that, if the development were stopped, compensation of as much as £15m could be payable to Metro and Reed. It is nothing short of scandalous that this should be the case, and the Community Association are sponsoring an Act of Parliament which would reduce the compensation payable to a reasonable level. I wish them every good fortune.
New exchange
Very shortly now the Stock Exchange will move into its new London trading floor, which will be linked with computers and other such gadgets both to member firms and to other exchanges abroad. This is the end of a seven year building programme which has cost over £15m. The new site is a development of an old area near to the Bank of England, where the Exchange has been since 1802. I hope only that the Exchange will start to show a greater independence of mind than it has done in the past; and that such independence will justify all the extra spending. I have never liked the fact that the exchange is so close to the old granny of Threadneedle Street: brokers and investors are in business to make money, not to attend to the pleas, threats and wailings of governments and national banks.
It was different in the good old days, of course, when the Bank of England was just another commercial and profit-making moneylender, with a grander name than most.
If Parkinson's Law applies, the flash new Stock Exchange will mark the beginning of its end. Computers will take over, stocks and shares will be on sale at supermarkets, bookies' offices, Green Shield stamp depots and at the Co-op, and that fine old tophatted lineage of stockbrokers will come to a dismal end.
And not before time, either.
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