The Daily Alaska empire., 1933-10-30

w d4l AOt4-SU OOul lldl, d IltMS- paper not given to loose talk, has described the attitude of the capi- tai market as state of emotion al paralysis" The paralysis is evil dent enough, and it's effects in limiting recovery of the heavy in- dustries are not generally under stood. That the paralysis is the result of an emotional disturbance is not so easy to demonstrate. But the jumpy behavior of the mar kets, the waves of hope and fear which come and go, are a strong indication that investors and fi- nanciers are under the influence not so much of judgment as of nerves. The Wall Street Journal argues that the emotional para lysis of capital has been induced by a fear of imitation. It goes on to point out that this fear arises from the belief that the growing volume of government borrowing for it's extraordinary commit ments is steadily carrying the Ad- ministration away from the level fields of free choice to the slippery slopes of compulsion." In other words, the Administration is bor- rowing or planning to borrow, SC much that finally it may not be able to borrow, and will be forced to resort to the printing press.
 This seems to me a reasonable but incomplete diagnosis. Why is it, we must next ask ourselves that the Administration is con- hitting itself to these immense ex- penditures, to billions of dollars for public works, for paying of de- positors in closed banks, for loans to home-owners, to railroads, and heaven knows what else? What, in essence, is all this use of capital by the Federal government but an attempt. and a rather inadequate attempt at that, to fill the vac cuum produced by the paralysis of private credit and investment? The larger part of this govern ment expediture would become un- necessary if private initiative would revive. And yet, it appears that private initiative is paralyzed when it contemplates the conse- ouences of the governments doing what it is too paralyzed to do it. self.
 It does not take us very far tc areue that the fear of imitation is the cause of the paralysis oi capital. For we have seen that the danger of imitation arises from the attempt of the government to pro vide capital which is not forth coming because capitalists do nol invest. The inactivity of private capital is the immediate reason why this Administration, follow ing the precedent of the Hoover Administration, is being driven ln- to commitments that may produce inflation. The danger which cap ital feels is the effect, rather than the cause, of it's own para lysis.
 Where. then, shall we find the cause? We shall find it, be- lieve. in one of the characperlstlc d;lemmas of the effort to combine Recovery with the New Deal. Broadly speaking it is fact that American capital investment IS largely directed by the Wall street community. There is no evidence that there is an organized monop- olv. but it can hardly be doupteo that the main investment market is decisively influenced by the state of mind in Wall Street. This influence is particularly strong, at a time like this, on the bearisn side. When the captains of IT. nance are discouraged or appre- bensive, their sentiments infect ln- yestors, bankers and spectators in all the financial centers or tne country. Now the captains of IT. nance are discouraged and ap- prehensive and this is, l shoulo suppose, immediate cause of Vna' emotional paralysis, which tns Wall Street Journal describes. Bu' why are they discouraged and ap- nrehensive? Is it because Of the N R. A. or the Securities Act oi some of the other measures? My euess is that if the truth were h1,,ntly stated it would be that Il is not so much because of any narticular measure, but becaus' they feel in Washington a gen eral sense of hostility and distrus' | which may produce they know no' what.
 Still speaking bluntly, l. is evi- dent that this hostility and dis trust do prevail in Washington Now the state of mind in Wash ington also has its causes. They may be summed up by saying thai the exposure of certain of ths financial practices of the boom and in conspicuous cases, even o' the depression, has caused tht hostility, and that the lack of ade- ouate financial leadership has caus- ed the distrust. Take, for exam