Come and Get It!

One section of Franklin Roosevelt's new pump-priming program that Congress has passed on is a law allowing RFC to use $1,500,000,000 for loans of almost any sort. Last week, therefore, RFC Chairman Jesse Jones took to the air to invite businessmen to "come and get it." This they did with a rush: in Manhattan, for example, the Hotel New Yorker politely but firmly asked a bureau of the Smaller Business Association of New York to leave after 600 would-be borrowers had stormed it one morning in search of RFC loan application blanks. Nonetheless, Jesse Jones and Franklin Roosevelt were apparently not satisfied that enough uses had yet been found for RFC munificence. After White House conferences between Messrs. Roosevelt, Jones, SEC Chairman William O. Douglas and SEC Commissioner John W. Hanes. RFC revealed three more plans for injecting money into the hardening arteries of U. S. Commerce.

Underwriting. SEC last week announced that registration of new securities in the first quarter of 1938 set a three-year low of $355,819,000. In Wall Street it was considered quite a feat that a banking syndicate headed by Morgan Stanley & Co. managed to float successfully a $60,000,000 refunding for Consolidated Edison Co. of New York. Thus underscored still again was the almost complete stagnation of U. S. money markets which has existed for the last six months. Financiers are agreed that needed expansion of industry cannot occur until this stagnation is ended. But underwriters generally are too scared to attempt the job. Last week Jesse Jones announced that RFC would shortly undertake to underwrite the underwriters with secured loans.

Utilities. Last fall, when the big guns of business were trained on Franklin Roosevelt to force an armed truce, utility magnates let it be known that there was some $3,000,000,000 in needed utility expansion which had been held up because of the industry's fear of what the Government next might do to it or Wall Street. Whether this expansion is still needed now that power sales have been dwindling for six months is moot, but last week Jesse Jones declared that RFC would be glad to give utilities money for expansion. Said he: "We have heard a lot of talk about the expanding they could do if they got the right kind of money. We have the money and we will lend it to them right. Not for refinancing but for anything that will put men to work." Back cracked the industry's spokesman, President Wendell Willkie of Commonwealth & Southern: "Greatest immediate requirement of the utility industry is a large inflow of common capital indispensable for much-needed additional construction. Loans by the government will not solve the problem. The solution is dependent on a restoration of confidence on the part of potential utility investors. This confidence can only be restored by a clarification of the power policy of the administration."

Inventories. Last September inventories were estimated to be 35% higher than in 1936 and there has been much talk ever since that trade would revive and prices start up again as soon as inventories were back to normal. In the agile mind of SEC Commissioner John W. Hanes, until lately a Wall Street broker, this situation was last week reported to have produced the following chain of reasoning: With inventories high and buying slack, manufacturers unwilling to let their goods go at a sacrifice made bank loans against them; then, as depression deepened and prices sagged, reducing the inventories' value, the banks pressed for payment of the loans; this forced the manufacturers to sell, thus further lowering prices and persuading the public that since prices were still trending down it should delay buying. Why not, wondered John Hanes, let the Government finance these burdensome inventories as a price stabilizer?

Last week Jesse Jones announced: "We will lend for carrying inventories. . . . Until these inventories are reduced, employment will not pick up."

Chief flaw in this idea is the fact that most inventories are no longer excessive except in certain raw materials.* Inventories of manufactured goods are almost entirely back to or below normal. Montgomery Ward & Co. last week announced that its stocks were 20% lower than a year ago. Economics Statistics' index showed automobile stocks in March at 52% of the norm, against 82% year ago. The 294,000 tons of raw rubber on hand were 102,000 more than a year ago, but the 10,833,000-tire inventory was 2,000,000 less than a year ago. Wheat in warehouses has increased enormously, but flour stocks are down nearly 1,000,000 bbl. Iron ore stocks are high, but inventories of-such finished steel products as boilers and radiators are substantially below those of a year ago. Said The Annalist last week: "The chief 1937 element of unsoundness (over-accumulation of inventories in certain industries) appears to have been partly corrected and will probably be completely corrected within a few months."

Said Economist John T. Flynn of RFC's inventory program: "We are moving into what might be called the crackpot period of the Roosevelt depression. . . ."

*Surplus supplies of agricultural goods are already carried by the Government's Commodity Credit Corp. That leaves only industrial raw materials for RFC. Samples: copper, 343,000 tons on hand in March against 121,000 year ago: zinc, 118,000 tons on hand in March against 18,000 year ago; newsprint, 24,801 tons on hand in February against 15,995 year ago; soft wood, 6,354,000,000 board feet on hand in February against 5,385,000,000 year ago; rayon, 3.3 months' supply on hand this March against .1 month's supply year ago.

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