Evening star., 1939-01-01
Expected to Reach New PosDepession Peak Year
Greater Confidence
And Idle Funds 10
Spur Activity
1888 Demand Declines
Only Slightly From
Previous Period

By Cambridge Associates.
Although business statistic S
throughout most of the year were
seemingly unfavorable to new en-
terprise, new capital issues declined
only moderately in 1888 to approxi-
mately $80O,0OO000 in total valume
And toward the close of the year
under more favorable circumstances,
many plans were announced which
will come to fruition in 1885,
Never in the history of the coun-
try was there more favorable time
to borrow, with an enormous supply
of funds seeking profitable invest
ment. The easy-money policy of the
Government has made it possible for
many companies to retire high-cou-
pom bond issues and replace them
with 3 per cent to 4 per cent issues.
But, as has been demonstrated in
the last few years, easy-money rates
are not the only perquisite to new
enterprise. Perhaps the most i'm
portant development of 1898 is the
realization that the program of the
New Deal has finally come close to
taking it's final shape.
Any program involving extensive
changes in the requirements i'm
posed on business by government,
whether good or bad. creates suffi-
cient uncertainty in the mind of the
average business man to make him
defer capital expenditures until he
can analyze the forces with which
he has to contend. The average
business man came to the conclu-
sion, In 1888, that the framework of
q new era has been completed and
that further changes will be largely
designed to improve upon that which
has already been accepted as part
of the new system of cooperative
business and Government action In
the interests of the people.
New Record Expected.
Consequently. the year 1899 is ex-
pected to establish a post-depression
record in new financing. Utility
companies are perhaps obviously
ready for the investment of new
capital. Electric power production
has reached a point where expansion
of facilities and greater. intercon-
nection of power sources is not only
feasible but necessary AS was
pointed out by the Government
itself, the Nation has an interest in
the further development of infallible
sources of power in the interest of
national defense. The details of
changes under the Holding Company
Act have been largely determined
and are not expected to be disturbing
to operating companies. Increased
production and greater efficiency are
imperative.
The production of materials used
in building has increased in 1898
and many new materials and prod
ucts are ready to be launched to
meet the needs of new building
boom and help it on its way. This
covers wide field, and because of
the boom aspect, will probably open
the gates to a substantial amount
of stock financing, as opposed to a
predominance of bond financing for
the utilities. Another industrial
group which is in decided need of
additional investment is aircraft
manufacture, which for the first time
is ripe for introduction of mass pro-
Suction methods on a large scale.
This means heavy machinery of high
cost.
Call of Romance"
The record level of bank deposits
has already lead one large bank to
offer more stock, in order to increase
capital for the protection of de-
positors. Other banks not we'll
enough heeled with surpluses to de-
clare stock dividends will undoubt-
edly follow. Once the foodgates are
opened. there will unquestionably be
a myriad of new products and prof.
ects with sufficient romance to call
forth new funds from individual in
vestors who for the past several years
have felt that the spirit of enter
prise has been deadened if not dead
There has as yet appeared no one
big romance, such as that of the
automobile or the radio, but in our
system it has always been the func-
ton of capital to risk itself in ex-
perimentation on various products
until something of universal appeal
and profitable prospects has come to
light. The recent growth of expen-
ditures for amusement and recre-
alton as compared with expenditures
for food, clothing and shelter lead
some to believe that the American
public now has time and surplus
funds to support an amusement in
dustry past all previous dreams.