CITY DIARY
CHRISTOPHER FILDES
To suggest the methods and standards of a quite unusually pig-headed lance-corporal is something that ministers should strive to avoid. As thd" affair of Mr Jocelyn Hambro makes clear, more effort is needed. The Department of Employment and Productivity—and let me say in passing that whatever this Government has done for business as a whole, there is no complaint from the manufacturers of brass plates—has set itself to investigate an increase in Mr Hambro's salary. This is the first case of its kind. Mr Hambro, as readers of this column or most other columns will recall, re- cently observed that we had the worst Prime Minister since Lord North. Connoisseurs look forward to the terms in which Mrs Castle will explain that this is the purest coincidence.
Chairmen will now be well advised to protect themselves by the use, in their annual state- ments, of some suitably subservient phrase : may I suggest 'We have the best Prime Minister since Sir Alec Douglas-Home'? If they don't. they will be lugged along to St James's Square and put to the question. 'What tests do you apply to your productivity, Sir Herbert? Does not your output per man-hour sag signifi- cantly after luncheon; and how do you account for that dip in the graph in Ascot week? I beg your pardon? You recognised your failings but sought to rectify them by the use of in- centive payments. Directly contrary to our policy. Pay three lots of surtax. Good morning.'
As for Mr Hambro, he is in trouble because, when asked a question, he answers it. Plenty of chairmen, asked about the £10,000 political contribution, would have found some vague and emollient form of words; or even have said nothing about it—since it was made after the bank's year-end—until the next set of accounts. Mr Hambro isn't like that. I appre- ciate it. But Mrs Castle clearly doesn't.
Nicholas Davenport's tale of woe from the market in government stock has suggested to me an important textual emendation in Jane Austen. I follow the example she meant to show: 'Let other pens dwell on gilts and misery.'
'Dealers doubted if the Government's measures were strong enough, and the pound came on offer—it's a familiar sequence. So far as cur- rency management is a question of getting and keeping confidence, the foreign exchange dealers confidence is what you need, if not most, certainly first. Obviously, they make their judgments and act on them: that is .what they are paid for. Less obviously but no less sig- nificantly, they are in touch minute by minute with their opposite numbers in Zurich, Paris, Frankfurt. Milan, Stockholm, New York; and dealers in all these centres, with immediate decisions to make, must to a large extent take their cue from what London is saying.
Now—for the first time, I think—one of these weather-makers has come out with a book. He is Mr John Cooper, manager of the foreign exchange department at Schroder Wagg; and his Penguin Special, A Suitable Case for Treatment—the 'case' is the balance of payments—gives some sharp glimpses of the dealer's-eye view. Chancellors past and present should read Mr Cooper on govern- mental decoy ducks—non-cuts in unprojected expenditure--which, once recognised for what they are, do so much harm. And (a new and
frightening point to me) he treats the Bank of England's unwillingness to support forward sterling as a sign that the Bank is not sure that it can hold the $2.40 parity. This is arguable—I should have thought it meant only that forward intervention, having proved appallingly expensive, is now out of favour —but what Mr Cooper and his fellow dealers think is what matters.
One old friend I was surprised to meet in his book was the argument that the central bankers, with more resources than the specu- lators—can always defeat them. It's an argu- ment I have often used myself: like Eeyore with his tail, I was attached to it. But the fates of sterling and gold have shown the limits, if not to the central bankers' power, then at least to their patience at spitting into the wind. 'All will be well: the good bankers will save us' is as dangerous a view as It's not our fault: the wicked speculators have sunk us.' Both are derelictions of duty.
We live in stirring times, as Mr Norris habitually remarked; adding lea-stirring times.' The storm that Sir Frank Kearton has now raised is quite as much as the City's tea-cup can take; and if iralops over to stain the clean napery of mer- chant bankers and investment managers, that seems to be all right by Sir Frank.
I am less enthusiastic for the takeover code than are those financial journalists who stampeded the City into adopting it, so I am less' concerned than they are at the prospect of Sir • Frank blowing it sky-high. But if that is what he wanted to do, he could scarcely have set about it better. On the particular ruling that he dislikes, he has a strong case. Courtaukls and their new merchant banking advisers, Hill Samuel, are -criticised for letting it be known, during the course of Dufay's bid for Inter- national Paints, that if that bid fell through Courtaulds would make one of their own. This, says the panel, gave the International Paints shareholders inadequate information : Cour- taulds should have named a price.
Sir Frank may well say that if he had told the shareholders less—in fact, nothing at all— the panel wouldn't have had a word to say to him. And since the Hill Samuel partner con- cerned was one of those who drafted this sectiOn of the code, the panel is left looking faintly silly. Sir Frank, though, widens the argument and wants a whole pattern of behind-the-scenes fixing to be brought out into the open. I think this would—for once, anyhow—do good. As a quid pro quo there could be a similar public expose of the IRC'S techniques when it goes behind the scenes. I am told that the experience is not unlike finding a blunderbuss prodding one in the short ribs.
Meanwhile let me draw your attention to what I think is a new weapon in the bidder's armoury. Mr Bernard Owen's company Uno- chrome is bidding for the old-established Stround firm of T. H. and J. Daniels, which makes hydraulic presses. The Daniels board recommends the bid: so do their advisers, who are Barings; only the founding family of Danielses, with 59 per cent of the equity, is holding out against it. Mr Owen may still declare his bid unconditional. This could reduce the number of shareholders to a point where Daniels becomes a close company—with dis- astrous consequences for the family interest To get out of trouble, they would have to sell. Pretty, isn't it? Could it—I just wonder—have been used against the Cambridge families and their allies by Rank?
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