“SQUALLS AHEAD”

Grey River Argus, 28 August 1939, Page 10

“SQUALLS AHEAD”

FINANCIERS' SIGNAL. (By Thomas Barton, Financial Correspondent). Stockbrokers have got a grouse. They are about the only section of the easy-money crowd which is not getting an easy living right now. They are puzzled, bewildered, annoyed because the "investing public” doesn’t seem to want' their services. Stimulated by huge arms borrowing—£soo imiltions this year—British industry is booming. There were never so many employed, rarely s 0 few without a job. It is certain that most firms will make record profits this year. Yet no one will buy or sell shares. The share market is fiat. No commissions come rolling in. The situation is unprecedented. Yet the more intelligent of the stock dealing fraternity have a sneaking feeling that the “investor” is right. All the coaxing in the world—and the City tipsters have been uncommonly busy during the past month —will not induce a punter to put his money into shares unless he has a hunch that they are going to rise in price. And there has been a lot of clever coaxing by the tipsters . They point out that quite soon Britain will have reached what they call “full effective employment.” that nearly 800,000 additional workers have been absorbed into industry within the last six months, that most of the remaining 1,250,000 still registered as unemployed are only the loose ends, the scrap, permanent and temporary, of the labour market which capitalism needs if it is to function in its rather haphazard fashion. Soon, they say, the shortages of labour which will be felt in many ang increasing sections of industry, will start a rise in wages. That will force up costs which, in turn, will force up prices—and we will have inflation, or a vicious spiral of costs and prices which happened in Britain just after the War and which ruined so many Continental countries in the early ’twenties. The tipsters say, go for securities which represent not promises to pay—a given rate of hnterest—but real things like property, machinery, stocks of commodities. These things appreciate as the value of money falls. Still the investing public is unimi pressed. It just won’t play. One good reason is that people are scared of war. And if war comes they want their property in liquid form, in cash so that they can take it with them if they have to flee or have unusual demands put upon them. Secondly, they don’t swallow all the publicity about “full employment” and pondinginflation, for' they know that the boom is purely local. World commodity prices, Remain low. Freely produced commodities like cotton and wheat were never more plentiful. Only restricted commodities, metals, rubber, tea are holding up, and the world capacity to produce is very much greater than the monopolists will allow to be used. In America trade is not booming and the American demand for commodities is much more important than the British —- even with British rearmament. If there is war then it is not much use having a lot of stocks and shaies which probably could not be turned into money because there might be no stock exchange in which to sell them. If there is no war then the arms boom bubble will have to come to and end some time. Investors in the aggregate —although they are stupid enough individually—usually act with considerable foresight and they know that the current boom in Britain is the most unhealthy one ever, that it has no roots in world prosperity and that it might crack at any moment. The only sections that are making money out of it are the arms profiteers and the big monopolists, and it is giving a wry twist to British industry which is going w lead to a frightful slump if ever the accelerating arms drive slackens. Apart from the possibility of war itself, it is this which mainly alarms, and inspires caution in the mass of small investors. Collectively they act as though they instinctively know that their interests are bound up with yours and mine. The only time the stock exchange has shown signs or real life in the past six weeks has been when there were strong rumours about that the Anglo-Soviet peace pact was just about to be signed.