Shareholders and Directors
havo just read Command Paper 8318 on Control of,Dividends, and find in it grounds for pity _for a Chancellor who knowi better but who has not got the backbone to resist ignorant pressure from those whose votes he may very soon need. The proposals cannot of course effect the very slightest reduction in the cost of living or put any brake on the disastrous rush towards inflation—and still more inflation. It will I suppose, satisfy the desire of those Socialists who think that any policy which seems to " soak the rich " is good, whatever may be its general effect on the welfare of the country.
I write as one who believes that the capitalist system his prOvided a higher standard of living for a larger number of people than any other system of which we have knowledge. The capitalist system can however only function satisfactorily in a competitive world or, failingthat, when it is controlled by,high-minded men conscious of their responsibility— not only to their shareholders but to the community.- There has teen no effective competition in most industries in this country since the drive for rearmament started in 1938, and in only too many cases those in command of industry have used their power to exact exorbitant profits. These are probably in a minority, but day by day and week by week company results have been published giving profit figures which are enormously -greater than in- normal times. If these increased profits were due to larger turnover, they would be justified and should be encouraged. But we know that they are often the result of a reduced turnover—reckoned in volume of goods. This is partly due to shortages of various kinds, licence difficulties and the like, and partly to the view that no one today should work for more than the minimum hours per week—a condition by no means confined to those generally described' as " workers."
Shareholders as such haVe derived very little benefit from these swollen profits. Shareholders neither, run businesses nor control those who do. An examination of published accounts'often reveals that those engaged in-:executive management are taking vast sums in the way of remunera- tion. It is a very poor whole-time director who does not receive more than the Lord Chancellor.
I noticed in a recently published report of a medium-size company that the amount paid -to directors averaged more than £20,000 apiece, in addition to which there was the annual amount to provide pensions (for the same directors) of nearly £30,000. Such figures-are hard to justify, even taking' into account the fact that the tax-gatherer takes a large proportion of them. Is it any wonder that trade unionists, seeing such figures, look round to see what increased share they 'can obtain of the good things that are going ?
I would suggest to the-Chancellor that he would obtain !substantial addition to the revenue if he would instruct Inspectors of Taxes to examine carefully the amounts spent by companies on behldf of direc- tors:. Are the motor-cars allowed really essential to the running of the business ? Are running repairs to private cars a fair charge against a company's accounts ? The ostentatious display of large and costly cars has more effect than is sometimes realised. How many secretaries spend much time doing personal tasks for directors ? Then there are the charges for travelling and entertainment expenses. Surely the rule Should be that the scale should be such as the individual would enjoy if travelling at his own charges. I wonder what would happen to the leading luxury hotels if this reasonable standard were "the rule.
It is difficult to write calmly about " entertainment expenses." Such can rarely be justified: An honest man doing honest business does not need to entertain beyond the cost of some modest meals. In less mealy- mouthed times such expenditure was recognised and described as the corruption it is. The overthrow of the capitalist systetit in this country
will bring great misery to us all. If it should happen, it will be due in quite an appreciable degree to the sheer greed and irresponsibility of those who should be its jealous guardians.—I am, Sir, yours, &c.,
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