Evening star., 1941-03-26

CTedSulS pIOUUC- D"'iu
ton, the only agency in the Gov
ernment which could perform a
useful function in making it easier
for the capital flow to start into in
duStrial channels, namely, the Secur-
tiles and Exchange Commission, is
concerning itself with mass of red
tape and restrictive regulations ap-
plicable to business operations.
1t will be recalled that when the
depression began, sensible econ
omists tried in vain to persuade the
New Dealers that printing by
private funds could stimulate the
heavy goods industries. Instead of
diSburSing funds through unprO-
ductive w P A. projects it was
urged that the Nation would see
signs of recovery if the durable
goods industries were encouraged.
Today the armament program has
given the durable goods industries
the very stimulus which had been
hoped for in the 30S and the country
is beginning to emerge from the de-
preston of the last decade
Basic Cause of Unrest.
But to get the full benefit of the
expansion which is going on now in
the heavy goods industries, it is
essential that medium sized busi-
heSSeS as we'll as large ones should be
assured of steady flow Of capital
The financing of war business
through Government credit is not
as beneficial to the country as if
the American people were able to
buy equities in American industry
The benefits of the expansion of
America belong to the people of
America-whatever increment is OBJ
tanned could we'll inure to the ad-
vantage of investors who have
saved their money after spending
years of toll in earning it.
Yet there isn't any Government
agency devoting itself just now to
a study of how private savings can
be brought into the defense activ-
ity. All the emphasis instead is on
the purchase of Government bonds.
Industry needs new capital, but
there are a thousand and one bar
riers to obtaining it-alI of which
leads right back to the fact that
the New Deal strategy sets up fac
tors compelling Government to do
the financing And this invariably
means Government control in the
end.
One of the basic causes of unrest
In America today is the fact that
the New Deal is continuing its rad
ica1 practices in the face of an in
ternational program which requires
the solid support of industry and
finance. These latter elements live
in constant fears that the New
Dealers are planning to use the war
crisis to bring about a socialistic
state which will break down the
system of free enterprise. Instead
of using every opportunity to dis
prove such a thesis the New Deal
agencies give every evidence of an
intention to use the war situation
to strengthen their socialiStic pro-
grams.
Thus the sudden intrusion of
more and more Government pro-
posals for Water-poWer development
is speciously linked to the alleged
needs of national defense. 1t is
wen known, on the other hand, that
steam plants are not only more con-
tinuous in operation but that engi-
neerS figure the costs to be cheaper
than hydroelectric projects, but the
administration sticks to its schemes
of five T. V. AS just the same
and seems to care more about paw
ing the way for public ownership
of utilities than about the imme-
diate needs of the country for cleo
trio power for defense.
Narrow Interpretation.
The story of electric power output
will not bear investigation by i'm
partial sources. for it would show
that the administration has delib-
erately killed off electric power eX-
pansion in the last few years by
two methods. One was to encourage
Government competition and de-
moralize private systems and thus
discourage investors in utility COM
mon stocks. The other was to bring
about a breakup of the major utility
systems through the excuse of a
holding company law.
If mere abolition of the abuses of
the holding companies were all that
was desired, it could be brought
about under existing law without
subjecting the Nation to a major
surgical operation in utility man
agement, thus preventing the f1nanc-
ing of new plants needed to meet
q belated expansion. But the plans,
as revealed by the S. E. G. rulings,
show a narrow Interpretation OF
the present law Congress sits back
and let's the executive agencies go
on with their experimentation while
the whole capital market of the
country is adversely affected.
1t may be argued that the diff
culties of financing are not due to
S. e. C. restrictions alone, but to
the imposition of taxes that are
making it impossible for an investor
to see how he can ever earn a fair
return on his money. Small wonder
the stock market is in the doldrums.
1t might well be the function of the
S. z. C. to do a constructive job
In studying the effect of taxation
on the financial and economic sys-
TEN of the Nation in war period
with the idea of putting aside some
of the legalistic monkey wrenches
that interfere with capital expan-
sion. This would be a vital step
toward strengthening the financing
machinery of the country to meet
the war strain.
A new chairman is shortly to be
chosen by the S. E. c. and a men,
bership vacancy is to be filed by
the President. Mr.. Roosevelt has
an opportunity to introduce an
up-to-date psychology in the S. E. c..
by the character of the new ap-
pointee who might be the new chair
man. 1t is subject being over
looked in the melee of defense prob
lems, but it is of the utmost impor-