Evening star., 1939-05-19
Spending Plan Report
Brings Opposition
To New Shot in Arm
But Wall Streeters
See New Program
As Inevitable
DOLLARS
Pa sHAks
BY the Associated Press.

bA tIlt ASSOCldted ITeSS.
NEW YORK, May 19.-Contro-
VerSy over heavy Government
spending. consistently opposed by
most spokesmen for business during
the last few years, got new impetus
today from Washington reports that
administration forces were prepar-
ing another spend-lend drive.
A canvass of varying points Of
view in financial and business circles
indicated widespread opposition to
another spending drive on the as
sumption it would serve merely as
another shot in the arm"
However, certain Wall Streeters
said the Oppressive effect of war fear
on investment sentiment inevitably
would push the administration into
new spending campaign to avoid
a further fall in business when the
present one tops off this summer.
Business spokesmen observed their
usual reticence in avoiding direct
quotation until they had opportunity
TO study a concrete plan.
After the series of Spend-lend
policies in Washington under the
New Deal, business men seemed to
have been prepared for another one.
particularly with presidential
election in the offing in 1910.
Not Much Effect Till 1910.
One economist said the proposals
outlined in Washington reports, even
If passed in this session of Congress,
hardly could have much direct ef-
feet until next year since the hous-
ing, utility and railroad outlay and
loans would require months before
reaching the stage of construction
and employment of idle labor.
Some immediate stimulus to busi-
ness might result from a revival of
imitation psychology" it was sug-
gested. Use of Sl,500,O0O0 900 of the
gold profit" in the stabilization
fund for financing housing, it was
explained, would shoot the supply
OF idle funds in banks to unprece-
dented levels and tend to make
business men alert for rising COM
modify prices
Such an attitude, it was said. prob
ably would start another forward
buying wave to replenish stocks of
raw materials and finished goods,
such as that witnessed last summer
The last few months business has
returned to hand-to-m mouth buying
in wholesale markets and industrial
operations have declined.
State Capitalism"
A leading housing authority said
private residential building has been
expanding and could be counted on
to continue to rise if Government
would undertake to encourage
private enterprise. The new spend
lend program outlined in Washing
ton. he held, seemed to mark further
evolution toward State capitalism. -
with the Government undertaking
10 furnish the capital for activities
formerly financed through private
channels.
In some circles, which have viewed
WIZ Sui 4CllG plIdSt VI Ile mO0ODDlV
inquiry in Washington as setting
the stage for more lending and
spending, the proposals were viewed
as tied in directly with the school
OF thought which holds Government
must continue long-range invest
ment spending to offset a decline In
private investment"
On the other hand. critics of Fed
eral spending maintained the entry
OF government into investment"
defeated its own purpose by dis
couraglng private enterprise and
keeping private capital markets
stagnant.
Security markets lately have been
passing through one of the quietest
spells Wall Street has known in
years. Inactivity has been blamed
by market analysts on a combina-
ton Of circumstances, including IN
certainty over the next move in
Europe and the direction of Federal
policies at Washington since the
hopkins recovery plans we're soft
pedaled.