National Affairs: What Next?

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Capital Expenditures. Last week President Roosevelt's attention was fixed on the necessity for stimulating capital expenditures. The briskest kind of retail business, by itself, would not be enough to get the heavy industries rolling.*Billions of public and private dollars would be necessary to do the job.

The Government had put up $3,300,000,000 for capital construction to be spent on steel, lumber, cement, bricks, machinery. With great fanfare Secretary Ickes had allotted almost half of this fund for public works. Yet his zealous caution and the routine delays of all government undertakings had kept cash outlays down to such trifling sums that heavy industries were still without real benefit from the program. Actual expenditures this year are not expected to exceed $500,000,000 with a scant 100,000 men reemployed. Last week four public works deputies set out from Washington on a 6,000-mi. airplane trip about the U. S. to try to hustle projects along.

Private capital was still afraid to come forward and help finance the New Deal. Investors were not yet ready to risk the uncertain monetary policy of the Administration. Because of its anti-public utility attitude, some of the best borrowers and builders had to go without capital for expansion. As predicted, the new Securities Act with its broad liabilities had virtually dried up the flow of private investment capital. By last week the Federal Trade Commission had registered only some $200,000,000 in new issues of which nine-tenths were for investment trusts which create no new business.

A distinguished outsider who last week expressed his opinion of the President's domestic recovery program was John Maynard Keynes, British economist. As an 'inflationist, his major emphasis was on capital construction with borrowed money. Said he:

"There is no conceivable way of putting more purchasing power into use except by increasing loan expenditure. . . . President Roosevelt put it in the forefront of his program. Nevertheless I fear that the hesitation in American progress today is almost entirely due to delays in putting loan expenditure into actual effect. . . . Little has been spent though much has been planned. ... It seems to have been an error in choice of urgencies to put all the national energies into the National Recovery Act. The most urgent problem was to expedite capital expenditure."