Evening star., 1939-05-19
Federal Acts Blamed
For Huge Supply
OF Idle Funds
ChiIds & Co. Review
Says Investors Fear
Crushing Toxes
BY ]. G. DONLEY.

]N-'' AoAeAAs t'4uJ 40 wa 'aA'f'
There are many answers to the ques-
ton, Why does money stay idle? One
of the clearest relates to reluctance
to assume risks when the Govern
ment takes in taxes so large a pro-
portion of the proflts-if any.
C. F. Childs & Co., the oldest
house in the country specializing in
Government securities, forcefully
states that side of the problem, say
ing, while existing Government
acts stifle new enterprise and in
dustry. people with investable funds
decline to venture the loss of capital
in new projects from which profits
could be taxed as high as 70 per
cent"
Or the accent may be placed on
the effect of such Federal measures
as the Securities Act of 1888 and
the Securities and Exchange Act of
1884, as in the following from the
book, Capital Goods and the Amer
lean Enterprise System" recent
publication of the Machinery and
Allied Products Institute:
Restrictions DeplOred.
THE rigid restrictions in the terms
of the acts and their punitive pro-
visions have been responsible in
large measure for the continued
stagnation in the movement of capi-
tai into the securities of business.
TOO much emphasis has been
placed by Government upon the pro-
lection of the investor from losses
incident to investment in the securi-
ties of business, and too little upon
the problems of financing the capital
requirements of the country.
IN fact, Government has ap-
peared to lose sight entirely of the
importance of the employment
created by such new investment. The
safeguarding Of investment is i'm
portant, but SO is the creation of
jobs Both can be accomplished
within reason, if approached from
the point of view of stimulating our
6IOllDlIl1 W lIIt vi
prise rather than restricting it to
the minimum. The capital markets
would be stimulated by moderation
of such repressive regulation. This
can be achieved without sacrifice of
the essential elements of these
statutes"
Labor Situation Cited.
Still others put the emphasis on
developments in the labor field, in
cluding "sit-down" strikes with
illegal seizure of property, and the
failure of the Federal Government
for a long time-and also many
State governments to protect prop
erty. And the drive to reorganize
the Supreme Court is generally put
in the same category, as tending to
make investors feel less secure and
thus increasing the risks Of normal
investment in new enterprises.
But the "sit-down" has been out
lawed. and the dispute over the
Supreme Court has simmered down.
Moreover, States and cities are
adopting defense measures against
dictatorial labor elements. On that
score the latest issue of the maga-
zine Steel reports the results of a
survey which shows that public i'm
patience with domineering and de-
structive tactics of some labor organ
izations is finding expression in
State and local legislation, in bills
and ordinances to limit picketing.
restrict strike action and curb other
activities.
Steel reports that, out of II bills
to curb labor unions introduced in
State Legislatures this year, five
already have been passed by both
houses Of 35 little Wagner acts"
and 33 anti-iniunction bills intro
duced. on the other hand only one
an anti-injunction measure in New
MeXico-has been enacted.
Big Deficiency Seen.
Just how serious has been the
stoppage in the flow of savings and
credit into business enterprise in the
United States in recent years is
sharply brought out by the Ma
chinery Institute book previously
quoted. Boiled down, the facts are
that, by the end of 1888, there was a
deficiency of more than SCI, 500 OOO,-
900 in business savings, and that new
security issues in recent years have
averaged only 1712 per cent of the
average annual volume of the 192O's.
The drying up of this stream of
capital investment is largely re-
sponsible for the fact that the Ma
tion's output of goods and services
in 1888 it says, was back to the
1our leyel of 1Q0Q