FINANCE AND INVESTMENT
By CUSTOS
EVEN in these days, it seems, Mr. Keynes's powers of per- suasion are not altogether lost on the gilt-edged market. It would certainly be hard to explain Tuesday's sudden rise in gilt-edged prices without giving Mr. Keynes's broadcast review of our finances most of the credit. When a critic who has displayed an acute awareness of the inflation danger ever since war broke out insists that this risk is being greatly exagger- ated, the market has felt, quite justifiably, that it can push one of its fears a little further into the back of its mind. Nobody, least of all Mr. Keynes, would wish to minimise the need to increase the rate of saving and to cut down private spending a good deal further, but it is as well that we should recognise that inflation is not in the saddle and need not be allowed to get there if everybody behaves.
With War Loan at a new 5940 peak of rori, the stock markets can justly claim to have given the right reply to the air blitzkrieg. Buying is not very heavy, and it comes chiefly from the banks, but it is obvious from the responsiveness of prices that selling is practically non-existent. Much the same story can be told of the speculative groups. Despite the air- raid damage risk, prices of industrial equities are holding up well simply because investors have made up their minds to see things through. It is already clear that the blitzkrieg is not going to have much success in denting the investment front.
THE CHANCELLOR FLOUTED
I hold no brief for high-handed officialdom, even in the stress of war conditions, but my sympathies are with the Treasury in their brush with the board of Great Boulder Proprietary Gold Mines. Here is a company with a good case for special relief from dual taxation. Mr. Claude de Bern' the chairman and managing director, has been in touch with the Treasury on the matter, and so far his case, like that of many other companies, has not been dealt with. Thereupon- Mr. Bemales formulates a scheme for transferring the .com- pany's domicile to Australia, and actually steam-rollers it through an extraordinary meeting in face of a specific request from Sir Kingsley Wood that the plan should be dropped. Even if the company has a cast-iron case for tax relief this is surely not the best way to press it. There are special factors, however, which make the Otano-llor's action entirely defensible. About two months ago Mr. de Bernales reccivea from the Board of Trade the full text of Sir William McLin- tock's report on his group of companies, excluding Great Boulder Proprietary, which was the subject of a special inquirY. So far, the shareholders of the companies concerned have been
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FINANCE AND INVESTMENT
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kept entirely in the dark as to what this report contains, although it is obviously relevant to any judgement on the affairs of every company in the Bernales group. Why the delay in publishing this essential document? If the directors persist in holding it back, the Board of Trade should take the initiative and give full publicity to the results of its inquiry.
RUBBER PROSPECTS
While E.P.T. conditions set limits to the dividend-paying possibilities of rubber shares, it becomes wore and more clear that the war-time prospects of the plantation companies are good. Thanks to America's decision to build up a large stra- tegic reserve, rubber producers are called on to operate on a high export quota and arc given prices which have a satis- factory margin over costs. It is now apparent from the full terms of the agreement between the Reconstruction Finance Corporation and the Rubber Regulation Committee that the reserve stock of 330,000 tons which America is to acquire by the end of 1941 is to be in addition to a normal privately- owned stock estimated at 150,00o tons. By the end of next year, therefore, America should have total stocks of nearly 500,00o tons. Liquidation of the strategic reserve is not to begin before the end of 1943. After that date sales are not to exceed loo,000 tons a year and will be carried through so as to cause the minimum disturbance to world prices.
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