Skinflint's City Diary

The three-day week has been generally thought to be leading to an excessive squeeze on the liquidity of the smaller manufacturing company. On further reflection this does not appear to be yet the case though there is no doubt that eventually it will lead to difficulty, not because of the effect of shorter hours on production but because of the effects of steel and other primary material shortages from mainline industry. In fact, smaller companies are discovering that their cash position actually improves in the short term as debtors created during the full working week pay up and creditors charge less for the smaller off-take of supplies during the current short working. There is, of course, nothing fundamentally healthy in this but it goes some way to explaining the smaller calls on the banking system than was expected.

Unhealthy profits

The profits of the joint stock banks resulting from present high, to put it mildly, interest charges did little to tilt the electoral balance during the election towards the Conservatives, who showed no courage at all in attempting to reduce interest rates during their period in office. These profits and those in other industries benefiting from inflation should, of course, be taxed puni tively as close to source as possible.

Banking profits, given the monopolistic position of the big banks, might have a special tax, though the activities of the Treasury in dealing with the inflation brought about by the Korean armaments boom bear restudy. An excess profits levy was introduced based upon the amount profits exceeded a 'standard' profit based on a two-year earlier period.

Whatever criticism we have of Mr Nixon, the United States acts fast because they appear to have draft financial bills at hand to meet most eventualities. The most recent is the 'Windfall' profits legislation that is being sped through to mop up some of the unhealthy profits being made by the oil companies due to 'the rise in international posted prices. The British system — it is Mr Heath's fault — is not only so slow as to appear transfixed but has no one beavering away preparing for the worst in the manner of an economic Sir Maurice Hankey.

Five-year plan

A few weeks ago I saw that William Davis, the brilliant editor of Punch magazine (he has made a £100,000 annual loss into £100,000 profit), mocked my suggestion that the party winning the election should produce a five-year energy crisis plan for their period in office. The sentences that he held to ridicule suggested that the political party winning the general election "should get us out of

Europe and put forward measures that would be in essence a draconian rationing and nogrowth economy for this period. There would be strict control of overseas holidays, the rationing of imported goods particularly luxury goods and petrol and the covert protection of nascent and weak industry through import deposits. Emigration would be discouraged and immigration qualitatively encouraged. The birthrate decline would, so far as it lay within the power of the authorities, be reversed because of the horrifying possibility that by the year 2000 more than 30 per cent of the country's population will be past retirement age."

Now William Davis does not like any of this at all, particularly the bit about rationing and raising the birthrate. He thinks it smacks too much of the war and he is right. The purpose of rationing is to lower prices, though during a war much store is placed by the propaganda machine on equity, cost and shipping difficulties. The present oil and commodities boom would suffer a devastating collapse if a major state such as Britain constrained its buying by decree. A snag is not the EEC rules, public outcry or the threat or reciprocity, but the cost of setting up the rationing establishment. Mr Nixon recently discovered he needed 17,000 civil servants to establish gas rationing in the United States.

EEC

There are many to whom the Common Market is an article of faith. The market has cost £3,000 million so far. Is there a price to this country at which true believers would accept that it had failed? Is it £5 billion or £10 billion? They lead me to believe that failure is in itself an integrating process and that, when there is a common currency and financial reserve, an internal deficiency will no longer be seen as a measure of failure. Well and good, but it will also mean industrial drift to the prosperous industrialised zones wherever they are found to be, and localised impoverishment in this country if we are foolish enough to follow this sort of reasoning. No amount of regionalised aid or social subvention would make up for what we

will lose. It would help if a sum be set down as a cost to the UK beyond which we will not go and which may be seen as a barometer of the process of integration.

True independence

Population+ energy resources = prosperity, is a true axiom you may agree. Accepting this, it seems that the terrible problem of Palestinian refugees highlighted by the hijacking on Sunday of a British Airways jet might be resolved by the oil-rich but sparsely-populated Gulf states not only accepting but encouraging immigration of Palestinian Arabs from Israel. Whatever they plan for their oil wealth, they will need everyone acceptable to them to build up the infrastructure of industry to take them beyond dependence on primary oil production.

Man of prmciple

Campbell Adamson, the director of the Confederation of British Industries, whom I had some cause to criticise in what I thought was his fawning admiration of Mr Heath during the trickY negotiations with the National Union of Mineworkers, has shown a manly independence in expressing the true interests of his members and businesses in stating plainly that the Industrial Relations Act has sullied union and employer relations at national level and should be repealed. That he said this during the general election is to his added credit. There are too many people in positions of influence, and financial journalists particularly, who have dropped the pretence of an impartial search for the truth, in backing Ted Heath, the purblind choice of their proprietors, willy nilly. Sir Michael Clapham shows warm loyalty in dismissing the criticism of Campbell Adamson who has done more to serve British industry and his Confederation by standing up t° the fatuities of a political leader, before he was utterly discredited by the will of the electorate, than so-called loyalists on the fringes 0f the media who have sold then selves through the game of wrangle, wriggle, hassle and job" bery that passes for independent comment.