Evening star., 1933-10-14
COMES TO DEFENSE
OF SECURITIES ACT
Brokerage Firm Holds Lack
of New Issues Due to
Other Factors.
BY EDWARD c. STONE.

BY EDWARD c. STONE.
That the new securities act, ad-
ministered by the Federal Trade Com
mission, Is not to be blamed for the
far reaching lack of needed new f.
nancing which in turn is further de-
laying business recovery, is asserted
in the latest review of Clark, Childs g.
Keech. Attacks are made on the
new law every day, opponents insisting
that Congress will make vital changes
In it during the coming session. In
some quarters the new act is given en-
tire credit for the stagnant condition
Of the capital market.
In clear picture of the other side
of the controversy the brokerage firm
states that the first item which will
make one wonder whether our new
securities act really is as restrictive as
is claimed, is study of developments
in England'S capital market this year,
which so far has been quite inactive
outside of governmental issues 1t is OF
course true that England has not wit
messed a phenomenal recovery such as
has developed in this country. She
nevertheless has had a sustained, If
modest, improvement" as termed by
the economist" Furthermore, she
has witnessed tremendous inflow OF
funds. which, even if it be nervous
money" has had The effect Of easing
her money market.
England has had no securities act
of 1888 and yet her capital market
for private issues is practically as dead
as ours. For the first nine months OF
in@ n
English capital market haS-excludlng
domestic and foreign government loans
amounted to 100000 pounds as
against 100000 pounds In 1882
Does this not indicate that there may
be other forces. rather than the Sc
curities act, operating to restrict new
f1nancing-forces which in essence are
the same in England as in the United
States?
Reasons for Fewer Issues.
It is true that the total amount OF
new corporate issues offered in this
country-both for refunding and for
new capital-has been lower than that
of 1882. If we analyze those new is
sues, however, we will find that factors
other than the securities act have been
responsible for the decline. For the
first eight months of this year, the I'M
DOrtant financing SUdIlSIlCS VI Sol
porate issues were as follows
1888. 1889.
and notes Sl34. .629. 900 S3O6,159 900
' and note notes. - .... 75,737,ooo 175 10000
Stocks - 1lS,682,000 13,169.0OO
secmrities 1929, O4s. 900 S495.OSS,0oo
The first important characteristic we
find is that the proportion OF stocks
has been greatly increased. This IS
logical development of higher STOCK
prices and lower purchasing power OF
the dollar. A similar condition existed
in 1929, when for the first eight months
of that year common stocks represented
Ct per cent of total corporate issues, the
Brokers' Review adds.
Looking further into these statistics,
however we find that this eight-month
financing was represented by:
Ra+l5oads Babo Utilities sss9s$SSS
investment trust. 1.0S9.0o0 .....'...
AN19sn manufacturing ia 139,733 900 o1.666:ooo
Aside from public utilities, 1t IS fact
that new corporate issues have 1or the
first 8 months this year greatly ex-
ceeded those Of last year.
Special Factors in New Issues.
Examination of the new corporate
issues indicates that they have for the
most part been brewery and gold mining
securities. This also leads to the broad
Indication that there are reasons other
than the securities act which are re-
stricting new financing. Breweries and
gold mines have this year special quail
fications. The beer act and the higher
price for gold attracted new capital and
new enterprise.
Imitation uncertainties, dollar uncer-
tainties, profit uncertainties as result
of the N. R. A., labor uncertainties,
governmental control uncertainties,
utility earning uncertainties as result
of higher taxes and rate reductions ana,
in the case of England, exchange huc-
tuations, artificial hindrances and un-
certainty as to the outcome OF the
American experiment" are the more
basic causes for the dullness in the new
capital market both here and In Eng
land. the analysis concludes.
How Congress will view the situation
remains to be seen. No hints have
come fro mthe administration that any
changes are wanted. Appointment OF
James M. Lands, 34-year-old Harvard
law professor, to the Federal Trade
Commission is significant. He fills
vacancy on the board At the same
time he helped draft the act and has
been told, according to reports, to give
the working of the new law special
study. If the public can be properly
protected by fewer teeth in the law,
some may be taken out.
Columbia Association Officers.
All officers and directors of the Co.
Iumbia Building Association were re-
elected at the annual meating yester-
day. j. B. Harrell. the president,
reported a healthy increase in total
assets and that substantial sum was
added to the surplus.
Officers reelected in addition to Mr..
Harrell were: H. B. Denham, vice
president; C. A. White, treasurer and
c. E. Kefauver, secretary.
The board of directors Is composed
of the above officers and F. J. Auth.
j. William Weber, A. 0. Denham G.
Gay Harrell and c. Krogmann. The
Columbia Building Association is a
member of the Federal Home Loan
Bank and the District of Columbia
Building Association.
BoteIer Guest at Fair.
Charles M. Boteler, Washington
agent for the Lumbermens Mutual
Casualty Co. of Chicago, is attending
the Century Of Progress in Chicago
as the guest of his company. The
mutual agency won the Century Of
Progress Club prize in a production
contest which ran from January l
to September 80.