Skinflint's City Diary

If one government after another abandons free enterprise in favour of an increasing amount of centralised interference and control, companies should be the last to complain. They have only themselves to blame. The major lead away from capitalism seems constantly to have been from industry itself.

For as far back as I can remember governments have been nudged, pushed and cajoled into making efforts to help with anything you like to think of — export promotion, development of new technology, acceptance of new equipment, protection from foreign competition and so on, and on, and on.

It is hardly surprising then that there has been steadily increasing official interference in corporate action. And now the government is getting stick from academic economists for listening to the wails of industry to adjust this, lower that, and level out the other. Fine tuning, now becoming generally discredited because it is found to be inherently destabilising to the economy, arose to meet the demands of industry for still better government control of its environment. Certainly ministers were also concerned with unemployment, prices, and balance of payments, but they were thought to come right if only companies could be assisted into the optimum condi. tions.

Of course, industry lost both ways, as was predictable. The fine tuning failed to produce the economic utopia but the government increasingly poked its nose into the business. To say nothing of all sorts of unanticipated adverse by-products. But they do not learn. Now industrialists are clamouring for the government to pump money into troubled companies to preserve them from insolvency. Ad mittedly governments have produced the economic climate which has made it all but impossible for companies to operate with any hope of medium term profit, and admittedly it is hard to scorn a lifeline when you are drowning. So the reaction is understandable, but in the wider national context is it wise?

One point is that capitalist economics should demand that if a company cannot survive it should be allowed to go under so that resources can be funnelled to areas where they can be more efficiently used. Common sense dictates that exceptions should be made to this rule — it is understandable that in an effort to preserve London's reputation as a sound financial centre, the Bank of England should prevent resounding crashes in the City.

Another point is that industry is going to get the help at a very high cost. Not perhaps in financial terms but certainly in the loss of freedom not only for the companies which get the Department of Industry crutch but also for industry generally as it becomes accepted that government always steps in at every stage and gets an increasing share of the action.

A third point is that if government creates the conditions which have debilitated the corporate sector by draining away much needed liquidity through advance corporation tax and increasing the rate of tax, then pumping it back with the other hand is hardly a rational or efficient answer. Harold Lever's idea, ventilated recently, of stuffing £1,000 million into incompetent industrialists' pockets could perhaps be replaced by not taking away the money in the first place.

If anybody has to take a responsibility for the corporate sector at times of trouble it should not always be Whitehall. The City could consider being less ready to pull the plug on companies (Natwest please note). They could perhaps help more by injecting management along with cash — after all if social responsibility means anything, it means having some duty to the people you make money out of.

Certainly though, governments ought not to be encouraged to stumble in every time, and they ought to resist the temptation to adjust every detail of our economic

life. It may be attractive in the short term, but in the longer term it is almost certain to be disastrous.

Slater and Lubok

With the Slater Walker share price. down to 66p there have been the inevitable rumours that the business is not as liquid as the market has been led to believe. Also Jim Slater's large stake in Lubok Investments (bought at 101/2p and now at 24p valuing his stake at £1.3 million) which is devoted to investment in gold and gold shares has inevitably meant that there are those who think that Slater may be gradually pulling away from Slater Walker in which he has only a tiny fraction of the equity and where the result of any market foray makes little positive impression on the share price.

The situation is, I should guess, something like this. Slater Walker is fairly liquid and in pretty good shape but it is now of less interest to him than backgammon on which he is hooked and an addict at E100 a point. Lubok's future will depend on investors joining the bandwagon at ever-increasing levels in the share price more than on a gain in the price of gold or gold shares. Gold is a deadly game dependent on a shaking of public confidence by a major bank crash which there is every chance of the authorities preventing. If you should doubt this, read the latest Green's Commodity Market Comments. Official holdings of gold at $42.22 are shown to be worth over $49 billion and at $150 are an incredible $177 billion. Greens say that a purchase at over $130 is hazardous since the United States authorities opened the vaults at Fort Knox and the even larger holdings at the Federal Reserve and convinced doubting Swiss Gnomes and financial journalists that the stuff is still all there. The free price is firmly in the hands of the American President which is probably why the Arabs in particular are keeping well clear, as other wise investors still should. There is no guarantee of a buyer at over the official price of $42.22. Lubok would be a fine investment if Slater could be persuaded by some :cynical swine into conducting a bear raid on SW and bidding for the stock with Lubok paper at a high price.

Needless to say, this suggestion is a joke. It would never be contem plated by Slater or any other, responsible person for one single moment. Besides being morally outrageous it would mean the end of any trust left for City institutions.

Brien and Vere

Alan Brien has been made to offer the usual profuse and almost meaningless apology, so beloved of libel lawyers, for getting it wrong about the Daily Mail and Harold Wilson's money. He has had to say:

'Last Sunday in a diary item, Alan Brien said that there were reports that "the Daily Mail is investing heavily in TV advertising this Sunday for a Monday morning scoop-of-scoops."

'Alan Brien said his sources suggested the Mail was going to demonstrate that "Harold Wilson has amassed a fortune during his years in politics — a self made demi-millionaire."

'This was not coorrect. Alan Brien accepts that the reports were wrong, that no television time had been booked and that no such inquiry into Mr Wilson's private affairs was in preparation or, indeed, had been contemplated.

'Alan Brien apologises to the Daily this iess

these a Mail and its Editor for the publication of rumours and the embarrassment I don't* understand what there was to apologise for, since we all know Harold Wilson's got a lot of cash, earned from his writings etc etc. Ted Heath's fortune is far more interesting and the Daily Mail might like to tell us about that sometime.

What Brien might easily have reported are the stories that have been circulating suggesting that Vere Harmsworth, who has turned the Mail into the best of the popular papers, has been thinking seriously about husbanding his personal resources against the wealth and other taxes envisaged by Mr Healey, by sending the saucy-eyed Mrs Vere to take up domicile and residence abroad.

Mrs Vere — who, by the way, was traduced in the New Statesman recently, in an unsigned article by Paul Callan who descibed her as "an ex-chorus girl" when all her friends remember her vividly only a few short years ago as an exceptionally vivacious RADA student and ingenue of the legit theatre — is certainly off abroad. But only for a few short weeks to New York. Though, like the rest of us, they thought of it, no sort of tax bunk is intended by the Harmsworths.