Evening star., 1939-05-14
Wall Street 5keptica|,
But Slightly Better
Sentiment Appears
Some Leaders Believe
Bosis Is Formed for
Brood Recovery
BY HENRY PAINTER,
Associated Press Financial Writn-

domestic and foreign developments
the groundwork for general busi-
ness recovery.
Those who held optimistic opin-
ions were decidedly In the minority,
but even a partial change<of senti-
ment may be important in view of
the fact that in regular canvassing
of the opinion of outstanding lead
ers of the Wall Street community.
this is the first hopeful forecast in
more than two months.
The qualified optimism of those
who see possibilities of improve
ment is based upon these factors:
!. The reputed determination of
Secretary Of the Treasury Morgen-
thau and Senator Harrison Demo-
crat, Mississippi to fight to remove
tax deterrentS to business recov-
cry has apparently led President
Roosevelt to decide not to oppose
moderate tax revision.
2. The return this week to his
desk OF Secretary of Commerce
Hopkins after nine weeks absence
due to serious illness has renewed
hope of business leaders close to
him that he will use his influence
to further legislation designed by
business.
Witnesses Re assured.
3. Some of those leaders sum-
moned to testify in WASHINGTON
next week in the monopoly investi-
gatlon say they have received
SPECIFIC assurances from Peter r.
Nehemkls, who Will question them.
that the Securities & Exchange
CommlSslons S presentation of Wall
Street testimony will not be con-
Quoted in the "crusading" tone of
the 1913 PuJo and 1888 Pecora in
qulries in which Morgan partners
and other leaders were sharply
dealt with.
q. The resignation Of Gen. Robert
E, Wood as business ambassador to
WashinCton' on the day of Hon.
klns' return was said by friends to
be at least in part due to the as
signed reason, an expected pickup
IN business Of Sears, Roebuck &,
Co, OF which he is chairman.
D. This anticipated pickup. which
would be shared by others, in turn
was said to be partly due to large
appropriations for farm aid. tho
erect OF which may be felt in manv
industries.
6. The foreign situation is not now
eXertlng the depressing effect on
Wall Street that it was only a few
weeks ago.
7. Price strength in many leading
commodities is considered a most
favorable business omen.
however, a majority of those in
tervleWed had opinions to offset all
these conclusions. save that on the
foreign situation, which is generally
shared.
Tax Problem Stressed.
Inc TAX revision question loomed
biggest Just now in Wall Street
minds. Those who participated in
what most of them now call the "un-
succeSSful' program of Hopkins to
oflng recovery, say that in year-end
taIkS with Hokins he placed tax re-
vision second on the list of necps-
sary steps to bring recovery. First
on his list was settlement of the
troublesome dispute between Ten
neSSee Valley Authority and Com
monWealth & Southern Corp, and
ne is generally credited in utilitv
circles here with successfully hasten.
ing that settlement.
The Hopkins idea on tax revision
II was said, was along this general
llne: An outstanding business re-
coVery need is to break the capi-
tai g-Jam, stimulate equity com
mon stock financing to foster busi-
ness expansion. One important
way to help this end. it is argued
would be to revise Federal taxing
to stimulate such activity. Hop
klns, they said. agreed to work tc
this end, provided Federal revenue
would not be decreased, that the
burden on the lowest income
groups would not be increased, and
that the general aims of the ad-
mlnistration would not be inter.
ferred with.
In cooperation with Secretary
Morgenthau, Under Secretary OF
Treasury Hanes, and several Wal
Street tax experts. they said, such
program was drawn up in the
Treasury Department, but Lacked
presidential approval. Yesterday
President Roosevelt announced that
alternative tax revision plans pre-
pared in the Treasury Department
would be submitted to Congress. De-
tails were to be discussed at a White
House conference Monday. The
President was careful to say he
would not recommend the revisions
Compromise Feared.
Skeptics say they were reliably
told in the past 48 hours that Nor
genthau had planned to speak
firmly in favor of revision before
Senator Harrisons Senate Finance
Committee next week. Should
Harrison attend the Monday con-
ference and agree to a compromise
they said, they had little hope OF
effective" revision this session. On
the other hand, n-compromise
discussion before Harrisons Com
mittee might receive considerable
congressional support. they said
Both Harrison and Representative
Doughton, Democrat, OF North
Carolina, chairman of the House
Ways and Means Committee, have
D ~