The Waterbury Democrat., 1938-05-27

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 It is the automatic fact that someone has got to spend money. It can be either the government or private enterprise, but one or the other has got to spend.
 The present spending pro- gram is the second big shot- in-the-arm Roosevelt has giv- en business, and what some of his advisers are worrying about is whether another, and still another, will be necessary.
 Therefore, they have made comprehensive study of the whole spending-investment program, go- ing back to the World War days when the country first started the channelization of loans into non- speculative securities.
 Original impetus toward chan nelization came with the Liberty Loans, which big investors bought by the armload. This was the first time money had gone into tax-exempt and government se- curities in such quantity. The pre- cedent has continued; until to- day there are three great groups of investors, as follows:
 l. BIG INDIVIDUAL INVES- TORS who put their money in government bonds or gilt-edge se- curities, or even keep large amounts of cash on hand. Some wealthy individuals even keep their money in such widely scat- tered and low tax places as Ber- muda, Canada and Buenos Aires. Many figure that they have enough capital to live on for the rest of their lives, SO take their money almost completely out of circulation. Almost all of the big private investors avoid ven- turesome loans, the type which creates business enterprise.
 2. THE BANKS which, because of Federal Reserve requirements, plus the Federal Deposit Insur- ance Corporation, plus fear. also load up with government bonds, Triple-A bonds, and mortgages. Today a smaller percentage of bank funds than ever before is in venturesome investment.
 3. THE INSURANCE CON- PANIES have now absorbed more savings than ever before in his- tory, simultaneously are more re- stricted than ever, either by law or their own caution. Result is that some of the big insurance companies have enormous cash reserves on hand which they can- not profitably invest. This is un- healthy not only for their busi- ness but for the general public, because the money is taken out of active investment fields.
 Surfeit of Money
 Today there is more money in the United States than at any time in history. But due to the channelization of loans, actually there is 8 scarcity of money for the old type of venturesome in- vestments.
 It was this type of pioneering risk which built up the United States.
 Two other factors have helped dry up the venturesome money market.
 l. RTAINITY AND LACK OF CONFIDENCE, which usually cures itself once money starts flowing.
 2. TAXES. This is a highly controversial question, regarding which there are two vigorous diff ferences of opinion: the conser- vative view that a mans knowl- edge that he must give back to the government high percent age of what he makes, deters him from risking his money in a venturesome investment; and the New Deal theory that if the wealthy will not put their money to work, it must be taxed out of hiding.
 HIS mas been the conflict be- tween two warning groups in writ ing the new tax bill, which now cuts down the tax penalties on big business as an inducement toward more active investment.
 Whichever of these two
 theories Is correct, thus much
 is certain: someone must spend
 either pEivate industry or the
 government. And unless some
 means is found of breaking up
 the channelization of loans and
 weaning money away from tax
 exempt securities into venture
 some risks, then the present
 government spending program
 may merely be the beginning
 of a spending program almost
 every other year.
 NOTE-The Presidents pro- posal to curtail tax-exempt se- curities was one of the first New nE~