Milford chronicle., 1940-02-16
LOOKING FORWARD
By PRANKLYN WALTMAN
Publicity Director, Republican
National Committee


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One Of tile most significant and
accurate barOmeters OF the state Of
our economic health is to be found
IN the figures for new capital issues
that Is, issues of stocks and bonds
by Industrial enterpFises-an par
ticularly capital issues for new bus
iness enterprises. Investment of
money In new plants and enterprises
Is what makes jobs.
Reading from this barometer dur
ing the last eight or nine years indi-
Gates that our economic health is
very poor. Indeed, economically we
are suffering an alarming attack Of
perniciOus anemia. Our blood flow
new investment In private industry
or capital issues-has become so
sluggish that we have lost the use
Of some Of our limbs, demonstrated
by the almost 100000 unemployed
still with us after seven years OF
New Deal experimentation.
During the hast nine years capital
financing-the flow of money into
new enterpFises-ha been from one
half to One-thiFd Of what 1t was in
the previous nine years. In fact
many Of the security issues register
ed with the Security and Exchange
Commission are for refunding exist
ing indebtedness, rather than new
borrowing which makes employment.
Little New Investment
Thus a report Of the Securities and
Exchange Commission on effective
registrations during the first six
months of last year notes a total of
SOS, 100000 Of such securities-BUT
OF this total only $139,5S5.0O0 was
new money. including plant and
equipment. In other words, Of the
meager total Of security registFa-
tions recorded, only 1877 per cent
was new money that would enrich
our anemic blood stream.
Now what is the reason for this
drying up of investment in private
industry? Is there a lack of money
for investment purposes? Bank
statements answer that question
with a mo-. The banks are bulging
with idle mOney-indeed, never be-
fore have they had such a surplus OF
funds.
Can il be. as some New Dealers
assert. that our Industrial plant is
Over-built and that there is no need
for additional expansion? But that
question is answered in the ROOse-
veltian contention that one-third of
our people are ill-hOused, ill-fed and
ill-clothed. AS long as that situa- !
tiOn exists there will be need for ad- |
ditiOnal industrial production.
PrOfit.MOtiVe Is Spur
Why, then, is not the idle money
put to work to create the things so !
badly needed by a great mass Of our !
The answer rests I'm one |
fundamental aspect of our capitalis- !
tic system, namely. the profit-mOtive. |
The answer is that men with money I
do not invest it If they do not see
a fair chance Of making a profit. Ger
tainly they do not invest If the risk !
is great and the prospect for profit |
small or improbable.
This is true of the little business !
man as well as the Wall Street capi- |
talist. Jim Jones with $500 Of saw |
ings does not open hOt-dog stand |
on Main Street, unless he believes
that he can make a profit out Of /
selling hOt-dOgs. He commences to /
figure what a hOt-dOg will cost him !
and will seek TO. ascertain what he /
can sell It for. II the rent ON Main [
Street is very high, IL taxes take a |
gOOdly proportion of the difference /
between the actual cost and the
sc ling price Of hot dogs. Jim Jones
does not undertake the venture. He !
knows that in such circumstances he
would lose his $500.
So Jim Jones puts his $500 in
savings account or in a Treasury
baby bond" primarily for safe
keeping, hoping that some day he
will find an opportunity to invest It
with some prospect Of making
profit. The result is that Jim Jones
las to seek employment with some
)ne else. the sausage maker and the
Iaker do not acquire a new Gus
Omer. a store front on Main Street
'emains empty and a carpenter loses
/ few days work fixing up the
itand.
New Deal Approach Wrong
The New Dealers have talked a
.reat deal about this stagnatiOn of
In new enterprises. But
hey always seem to approach the
'rOblem from the wrong end. They
dOpt the attitude that there is
vicious or anti-sOcial
bout Jim Jones and all the other in
estors in the country who are
fraid to take undue risks. They say
apital is on a sit-dOwn strike, as
lobert II. jackson did some months
go. Or they argue that government
lust take over the task Of providing
lnds for expansion, as Adolf Berle
i'd before the Temporary National
economic Committee.
Il never seems to occur TO them to
y to remove the obstacles now in
he way Of Jim Jones and all other
lvcstOrs making a profit, such as
Scessive government regulation and
ed-tape; punitive taxes and unFea-
Onable labor demands. Oh, once i'm
while someone in the New Deal
iarts out on the right course but It
ever lasts more than a few
lonths!
The New Dealers have had seven
ears In which to prove their theor-
s. Obviously after such a trial
eriod their theories must be wrong
ecause we still are confronted by
le problem Of restoring this c0un-
" to economic recovery Reason