The end of the equity cult
Sir: May I suggest that Mr Nicholas Daven- port's reply (13 June) to my letter, about the disappearance of the equity cult, centres one-sidedly on a peculiar situation in govern- ment paper? His Gas 3 per cent does
give a paper protection against nearly three and a half per cent of inflation a year, but at the present rate of inflation this is only half of what is needed. And who shall say that the present rate is going to get better and not worse? Why should we be more virtuous than the French have been over the last generation?
We live in new, undisciplined times, and if it were not for the racial and other risks in South Africa, who would not prefer to back gold than the paper protection Mr Daven- port mentions? Meanwhile, equities share in this gold protection to the extent that though some industries will flop and some will soar, their land, buildings and other assets are bound to `go up' in paper value in much the same ratio as the inflation. How would the shareholders in the great French industrial concerns be feeling today if they had been swayed by Mr Davenport's arguments over the last twenty years. let alone forty years?
As regards the profits tax, is it fair to apply this to periods of twenty-five years? What was taken off government paper at the flick of a pen could be put back at the flick of a pen. And suppose the rate of inflation were such that it became quite necessary, in the interests of employment, to modify this tax over assets held for, say, ten years, as it already is in the us or, for aught I cn w, in other capitalist countries? As regards Keynes's sayings, he definitely laid down in his work that any British government should be able to borrow money for twenty years at 2-} per cent. What he would say today with the rate nearer 10 per cent might be a very different kettle of fish.
Assuredly there are many people about at present who will paraphrase the poet and say: `Ah, take the bricks in handand waive the Rest;
Oh, the brave music of a distant Drum!'
T. L. Cleave Redmarley, Sandringham Road, Catisfield, Fareham, Hants
Previous page
