FINANCE AND INVESTMENT
By CUSTOS
AFTER their manful resistance to the Chancellor of the Exchequer's pounding blows investors need no longer be enjoined to hold fast. The stern discipline of two years of recurrent shocks has toughened the British investor and weeded out every weak speculative position in the London market. Requirements in the matter of liquidity have been attended to, and it is now safe to assume that investors are determined to see things through. That is why even a 7s. income-tax and 7s. 6d. round the corner, plus the prospect of a £1,000,000,000 borrowing programme, have left quota- tions virtually unaffected. There is only a rivulet of sales and, as everybody knows, huge funds are lying idle and waiting for a suitable opportunity for employment. Tech- nically, therefore, markets are set for a rise rather than a fall.
Cynics may retort that this technical strength just about exhausts the bull points." In their view the investment and speculative prospect is so hopelessly blurred that the only rational course, apart, one hopes, from subscribing to the Government's loans, is to let idle money remain idle. While I admit that war does not provide the conditions necessary for a really active investment policy, I do not share this defeatist view. After all, some of the imponderables in the investment equation have already been resolved. It is surely reasonable to assume that war is to continue ; that the democracies will triumph (I have no suggestions for those who think otherwise); that cheap money is to be maintained ; that there will be heavy taxation and borrowing ; and that, although " inflation " will be avoided like the plague, we shall witness a moderate rise in the level of wholesale and retail prices.
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