CITY AND SUBURBAN
The generals mount their horses and charge madly off in all directions
CHRISTOPHER FILDES
I. wrenched myself back from my fact- finding sojourn in a mining community, sharing its common hardships and simple Pleasures — foie gras de canard, cassoulet Toulousain, ravioli with lobster and cream — only to find that I might just well have stayed and pursued my researches. Last week's purge of the pits is this week's calm and consultation, last week's mailed fist is this week's velvet glove on the smooth hand of Peter Walker. Really, for a govern- ment apparently composed of cautious footsloggers, this one has an astonishing Propensity for charging at top speed in both directions. There has been nothing like it since the Italians retired from the Isonzo. Last summer's inflexible commit- ment to Europe and its exchange rate regime is this autumn's free-floating pound. Last fortnight's strategy for bearing down on inflation by all monetary means is this week's strategy for jobs and growth. I dare say that next month's public-sector pay Squeeze will be next year's crop of special cases. Though these reversible tactics may give the commanders an extra chance of being right, the troops do not see it that way. They tend to think that the generals' brass hats contain muddled heads. The markets, though encouraged, see a govern- ment chasing this way and that after events or chasing its own tail. Sir Nigel Althaus, last in a 200-year line of Government bro- kers, once warned investors never to base their decisions On any idea of what minis- ters intended. He referred his audience to S.J. Simon's classic handbook Why You Lose At Bridge, which warns against dou- bling palookas — dud players — on their bidding. If they don't know what they're doing, asked Sir Nigel, quoting Simon, how can you?
Cote d'or
MY HARDSHIP posting took me to Car- cassonne in southern France, where my friend Peter Hambro is the president of the biggest gold-mine in Europe. A carbuncu- lar spoil heap crowns the limestone Plateau, a deep crater shows where it came from, a pit-wheel stands idle. The Romans struck gold here, and a French state-con- trolled company mined it until, a year ago, its debts became overwhelming. The com- Pany went into liquidation. The miners, as miners do, turned and fought. They drove the mine's heavy trucks into the main square and barricaded it, they set fire to the prefers office, they hunted down the man from the ministry. Protected by Carcas- sonne's two mediaeval walls and a draw- bridge, he was tucking into a large plate of ecrevisses when the miners burst in on him and took him away — much to the scandal of the restaurant's patronne, who com- plained that the miners were improperly dressed and that the chefs labour was wast- ed. Then to their rescue came Mr Hambro, bullion specialist and scion of the City banking family. He bid for the mine. He brought in new finance, new investment, new allies and expertise from the gold- fields of Australia. The miners are coming back to work, and next month they will set- tle down to the rewarding task of digging out a million proven ounces of gold. They will earn their croque-monsieur or cas- soulet butties, and as for their president, I hope he can look forward to the Legion d'Honneur. France likes to be sure of her strategic reserves, and though she may sometimes flirt with paper money, her heart is held in golden chains. What did de Gaulle say was eternally and universally regarded as the monetary standard beyond nationality, the unalterable currency par excellence? Not the dollar or the mark or some Euro-artificiality , but gold.
Up to the mark
THE CHARMS of a gold standard and the costs of a mark standard speak for them- selves in France. Money in the Paris market costs 14 per cent — though when Barclays tried to pass the benefit on to its French account-holders, it was ticked off by the Ministry of Finance for competing. (In France, the open-market year 1992 has yet to arrive.) Dear money is the price the French must pay for rejecting my advice on Maastricht —frangais, francaises, votez non, votez souvent — and trying to keep up with
the Germans. Now that we have abandoned the effort, the key rate for money in the London market has dipped below 8 per cent. With the money supply imploding and credit as popular as halitosis — building societies have to make special offers to shift their stocks — the markets now assume that the price of money will fall to a level where somebody might want it.
Coal needs a future
I SUPPOSE that if we mined gold instead of coal, Michael Heseltine might wake up to find nuggets dumped on his back drive. While he waits for them, he ought to study how gold-mining is financed. He could learn from it. The modern technique (which Peter Hambro expects to deploy) is a gold loan. A mining company needing to pay for development will borrow, not . money, but gold. There are, after all, plenty of central banks and other hoarders who are sitting on their bullion like broody hens, and would be quite pleased to see it hatch out. They lend gold to the mining company, which can sell it to raise cash and then set- tle down to repay the lenders out of the mine's production, on which they have first charge. This is now a quite notably cheap form of finance. Would it work for coal? Could it transform the arbitrary-sounding sums that Mr Heseltine put forward before pulling them backward? For this crucial calculation, there would need to be a futures market in coal. The City of London, which has markets in cannabis, dried blood and forward fish-meal, which trades potato futures and synthetic contracts in imaginary stocks, can surely meet the need.
Remember, remember
TRAFALGAR Day this week passed off without incident, and I thought it tactless to sound out French opinion on the new British plan to make it a Bank holiday. If we must choose a battle, we might find sup- port for 14 October, Hastings Day, but why bother? It is no part of the business of gov- ernments to tell us when we should be on holiday. That is something for each of us to negotiate and decide for ourselves. If, though, ministers must have a fixed date in the autumn, their obvious choice will pre- sent it self in a fortnight: 5 November.
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