6 FEBRUARY 1942, Page 22



REPORTS from Washington that we are about to witness the adoption of a common currency are, to say the least, premature. I cannot believe that-we have moved far enough along the path of financial co-operation to be within measurable distance of abandoning the sterling or the dollar signs. What is possibly within reach is some sort of financial pooling arrangement under which America will take charge of the currency debits and credits in the Western hemisphere, and sterling will play the leading role in the Eastern section. A simplification along these lines should not prove impracticable, and would facilitate the smooth financing of the total Allied war effort.

In the stock markets there is little to report but masterly

inactivity. The optimists who supposed that the Government was about to screw down its borrowing terms on the 3 per cent. Savings Bonds have been disappointed, and in the speculative groups there seems little to go for while the fate of Singapore is hanging in the balance. Sooner or later, however, weight of money will tell, and the funds seeking investment will be sallY stantially reinforced next month by the proceeds of the India and Canada stock requisitionings.

" BATS " PROSPECTS After reading Sir Hugo Cunliffe Owen's speech at the annual

meeting stockholders in the British-American Tobacco Company cannot complain that they have not been fully apprised of the position and prospects. Sir Hugo paints a rather sombre picture, as one would expect. The sharp cut in the interim should have prepared stockholders for that. It now seems that the full effects of the pledging of the Brown and Williamson subsidiary in the United States will be reflected in the current year's revenue. Under the pledging arrangements the American undertaking, which in the past has paid substantial dividends to the British parent, is precluded from paying dividends for at least five years. Nobody will wonder, in these circumstances, why the board has decided to make half-yearly instead of quarterly dividend distributions. What " Bats " will pay for the current financial year is not easy to gauge, but the total should be somewhere between is. 8d. and 2S. per Li -unit free of tax. --Taking the lower figure of 84 per cent. net, or 174 per cent. gross, the units at £4 would be yielding just over 44 per cent.


Most people must have been surprised by the disclosure at the Partington Steel meeting that the buyer of the substantial block of Partington's holding of Lancashire Steel " A " ordinary shares is the Securities Management Trust. The S.M.T. is, of course• a subsidiary of the Bank of England, and already has the younz control of .Lancashire Steel through its holding of the £500,0

ft of "B " ordinary capital. When the Bank of England increase`

instead of liquidating an industrial investment, one may be sure that there is some very good reason. In this case it seems to me that the object of the purchase of Lancashire Steel " A " shares is, first, to enable the. Partington company to go into liquidation and, subsequently, to wind up the affairs of Armstrong Whitworth Securities with the liquidation of Pearson and Knowles as an intermediate process. At the same time, I cannot quite see how the Pearson and Knowles liquidation is to be brought about. As a substantial preference as well as ordinary shareholder in 'Partington Steel, Pearson and Knowles is immensely improving its position. The directors estimate that the deficiency account will be reduced by not less than £350,000. Even that, however, would still leave a deficiency of Lizo,000, which wipes out all the ordinary and a fair slice of the third preference capital. Still, there may be other good things in store, such as the sale at a premium of some of the Lancashire Steel " A " shareholdings, which will enable the whole of the preference capital to be covered. Whatever happens, Pearson and Knowles 5 per cent. income debentures look a good purchase at 87. The yield is over 5f per cent., and there is obviously more than an even chance of repayment at par in the fairly near future. As a speculation, the Li first preferences around- los. 6d. also look a promising purchase on their repayment prospects.