Show This is education Increasingly warnings come that hat the theU theU U UI S S. S economy faces a catastrophic shortage s shortage of investment capital New NewYork's NewYork's NewYork's Yorks York's Chase Manhattan Bank took a full fult page ad in the Wall Street Journal to state that it foresees a massive capital shortfall by 1985 with unemployment unemployment double what it is today James J Needham head of the New NewYork NewYork NewYork York Stock Exchange says we must close a billion gap between demand for capital and supply available or face an accelerating stream of economic problems General Electrics Electric's economists predict annual requirements of U U. U S. S corporations cor cor- at billion per annum for 1977 through 1980 as compared with billion in 1974 The predicted annual annual an an- nual deficit is 50 billion The Chase Econometric Group predicts that by the end of 1976 or early 1977 the prime rate of interest will be 15 percent with a resulting abortion of the present recovery Mr 11 Needham sees not only reduced production and unemployment in the U. U S. S but global reverberations in the form of reduced U. U S S. S markets for foreign economies dependent on exports These forecasts must be taken seriously The root of the problem is that U. U S capacity for formation of capital resources is inadequate to our needs as a modern industrial nation Our industrial plant is older ohler than Europe's and Japans With the shortage of capital industry will have to lower over all capital requirements reduce investments investments' in plants and equipment or cut back inventory spending These steps will mean reduced business activity more unemployment substantially reduced growth rate and chronic inflation What to do The Chase bank is blunt Our Om country must change its economic direction Now We agree This means an end to the misguided ded tax policy which caters citers to the politically popular but economically unwise demands to soak the rich This applies particularly to the taxation of corporate profits and capital gains Our tax policy in both areas is far harsher than in most countries including such a supposedly socialist nation as Sweden Corporations need to retain earnings to reinvest in business through more realistic depreciation allowances and credits for dividends to shareholders Greater incentive must be provided for individuals to take investment risks inherent in providing the equity capital which is the lifeblood of American industry Since investment capital can only come out of savings policies must be followed which will encourage not discourage such savings We can continue current policies only at our peril It remains to be seen whether our political institutions and politicians are equal to the crisis which confronts us |