from Dave Windso.
A survey of the big business press is instructive if one wants to gain an insight into the significance of Mr, George Brown's plan, For reasons of space I have concentrated on the key quotations in each case, Readers should, if they want to get a fuller picture, read the original journals; most of which will be available from libraries,
The Stock Exchange Gazette of September 17th had this to say in an article entitled "THE PLAN « Its message for investors," :
" eeeelt would be a grave mistake to adopt the view that, because the socialists may not be in control much longer, the plan can be consigned to the wastepaper basket. It will, of course, be Mr. Heath's job as leader of the Opposition to pick holes init, But it is a statesmanlike document and he will find it hard to quarrel with its aims. He will also be grateful for the thought and donkey work that has gone into it. He will find them invaluable in drawing up his om economic programme which is not likely to differ much in its intention."
“ecesit will mean a great upsurge in prosperity which will make many shares rewarding holdings at today's prices, The only threat to profits contained in the plan is that *Profit incomes should be modereted through the working of the prices policy," Against this there is the statement that 'the Government is examining the present system of investment allowances to see whether changes are necessary to encourage private investment," The whole plan comes down heavily in favour of the intensive industries with a further bias in ‘favour of those areas of higher-than-average unemployment,"
It concludes:
"To sum up, the immediate investment message of the plan is blurred by the impact of the credit squeeze, But its medium-term messages will be studied carefully and higher investment ratings are likely to emerge for shares in industries to which cheerful five-year forecasts are attached," (our emphasis throughout).
The Investors Chronicle of September 17th had this to say in its "Stockbrokers notebook" :
“ eceethile the "National Plan" seems largely to confirm recent stock market trends, it represents a useful consensus of opinion about the prospects for various sectors of the British economy, To this extent, it should be a valuable handbook for the serious investor, But it might be dangerous to place too much reliance or its projections without taking other investment criteria into accounteseees.. On a straight investment basis, one has to be very careful. Specifically, to what extent are shares prices already discounting the projected growth for their sector? And how will profit margins - and equity earnings = fare, even if the hoped for expansion materialises?
"At the same time. the Plan provides some helpful pointers to some of the essential constituents of the long-term investors! portfolio. Correspondence with readers shows that many of them have too high a proportion of second-grade stocke..ein their portfolios, A selection of the leaders of the faster-growing basic industries would add a valuable element of stability. With share prices at quite reasonable levels, investors who have not already done so could consider such a move now, Bearing in mind the industry aspect and therefore sticking to market leaders, I would suggest
Invéstors Chronicle continued/
the following selections on the basis of the National Plans Allied English Potteries, Associated Portland Cement, Avon Rubber, Barclays Bank, British Petroleum, English Electric, Alfred Herbert, ICI, John Laing, Legal and General Assurance, Plessey, Radiation, Transport Development and Woodhall} Duckham."
As might be expected,that most political of the big business weeklies, The Economist, had quite a lot to say about the National Plan. Its leading article very extremely critical of the National Plan for not being “radical" enough. It is difficult to summarise the arguments but of particular interest is the following because it reveals an aspect of the plan which has received little attention elsewhere:
"..eThe last and biggest source of labour for expanding firms should come from the large numbers of workers who are underemployed in their present jobs. Mr. Wilson's government came into power on the wings of public. realisation that in many industries two or three Britons are required to do the job done by one American worker, The age of government-sponsored management consultancy was about to dawn, and to get Britain sparkling with efficiency again on all its cylinders, In the plan, the job of sparking plug is laid on the partetime efficiency committees known as little Neddiese They are to be responsible or partly responsible for export and importe saving studies, speeding export traffic, encouraging standardisation, longer runs, rationalisation, improvement of management and the use of labour, training and retraining, seeing that investment is kept up, and making periodic reviews of how the plan in their particular industry is kept upe There are expected to be twenty of these little Neddies by the end of the year, meeting only occasionally, backscratching mutually with other committeese Almost inevitably the main work in each little Neddy tends to be done by one or two men, who often overlap from one Neddy to the other, This is a monstrayg amount to expect from any group of twenty or forty people. But a massive drive to make more use of more professional management consultancy in pilot projects plays no visible part in the plan..."
Later on in the journal, in the business investment section, which is less concerned with politics and more with catering for its readership's need for advice, we reads
"After a bright start to trading the stock market showed little initial response to the National Plan - reading rather than dealing was the main occupation. Tobaccos weakened on the intention to step up the anti-smoking campaign, but there was no selling panic. As far as investors are concerned the main feature of the plan is the ommission of a section on profits. Perhaps turnover in the various industries will rise according to plan, but will profits rise in line? If prices are to be held down, so must costs if profits are not to be squeezed, and these, particularly taxes, can creep up persistently. By 1970 shareholders may want to see their dividends stepped up after a period of heavy plough back, and under the present system this would involve a big increase in tax payments. Investors will now have to ponder their problems, as they did when Neddy made its forecast in February, 1963, Then, after a brief period of excitement, the market settled down to the course it was following before the report, whose contents it had largely anticipated,"
One might almost say, governments may come governments may go, plans might come plans might go, but the stock exchange goes on for ever!