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Show Economic Highlights President Roosevelt's budget statement of October 18th has again focused attention cn ever-present ever-present issues cf debt and taxa- ri-n. Furthermore, it hss servsd to seme extent to support the more -i less commonly held belief that i tre President is gradually switch-i switch-i in? his fiscal pelicy. feels that th? t'.rn for en r-jccuntir.g has come, and that the budget must be balanced bal-anced by a ma jo: reduction in federal spending. F.cm a statistical standpoint, the budget report is not encc-urag-,i:g. Mr. Rccsevelt predicted that the deficit fcr the current fiscal year will be $695,000,000 $277,000,-jOO $277,000,-jOO more tnan he predicted in this April budget siatement. The in-c in-c ease he blamed on "excessive spending by Congress in the face cf Presidential warnings," as the New York Times phrased it. He estimated that Treasury collections for the: 1938 fiscal year will be $1, 357,000,000 greater than in the 1937 fiscal year, with income taxes accounting for approximately, half of the inciease. And he estimated that 1938 expenditures, excluding 'h.3 important item of debt retirement retire-ment (money set aside to pay eff government bonds r they fall due will be $656,000,000 unaer the 1937 level. Biggest cut, according to -he President's statement, is in the relief budget he anticipates tr.at in 1938 it will be $1,139,000,000 less than in 1937. These estimates are not especially espec-ially impressive in the face of subsequent sub-sequent developments that can Tiake the ac.uality vry different. Bu-, along with his budget statement, state-ment, the President tcok an im-pcrtant im-pcrtant step which has a tremendous' tremen-dous' bearing on fiscal affairs. He ordered two. of . the principal spending agencies the Reconstruction Reconstruc-tion Finance Corporaticn .. and the FuUic Works Adm,iniistiraion lip ."cake no further . cornrnitments. "Tire pronouncement,", to quote the Times again, "amounted to a death sentence for these emergency agencies," of which the first wc established by President Hoover and the second by President Rocse-velt. Rocse-velt. Hereafter, -the two bureaus Rill pay out money only for past ccniTidtments whose cost has net yet been met, and for. operating expenses. It is to be assumed, therefore, that they will be rapidly liquidated'. The President's step was a logical follow-up", cf the speech made by RFC. Chairman Jesse Jones on October 8, when he said: . "It is our purpose to disconr tinue general lending fcr the very geed reason that there is enough available private capital to meet legitimate demands for all purposes." pur-poses." ... The significance of the ultimate dissolution of the RFC and the PWA can hardly be exaggerated. Both served major, though entirely different, emergency needs. . The RFC was conceived and administered adminis-tered as a bolster for business-it lent money to railroads, banks, insurance in-surance companies, and similar, institutions. in-stitutions. The PWA was conceived conceiv-ed and administered as a direct, individual in-dividual relief measure it gave jobs to all types of workers, from day laborers to actors. Bjj sending fhe twa agencies into the 'limbo of history,, the President declares, in effect, that the depression is over and the emergency period is passed. pass-ed. As we enter . the winter season, the in'erest of industry is focused on the security markets. As Dorothy Dor-othy Thempson ; says, "For the first time in our1 entire . history, securities, have suffered an uninterrupted unin-terrupted decline for two months, with a fall of 67 per cent in -100 major stocks. In this decline, the small s.ockhclder, the middle class cf the country, has suffered unprec-edently. unprec-edently. Holding his equities outright, out-right, and having confidence in tlie state of the nation, he has held cn, right down to the last minute " L As everyone knows, the decline in security ' values , has not been justifed by the business outlook. There has been no major upturn in prcduction and sales this fall neither has there been a major tuvndown. In a number of . lines, conditions have been less satisfactory satisfac-tory than was anticipated in tlu summer but by no means to the same extent as the : stock market situation indicates. . ' . According to most authorities, key trouble , is three-fold: 1. Excessive Exces-sive taxation plus the fear of more and higher taxes; 2.. Too . much government restriction of security operation; 3. Foreign . Influences which are almost completely : .unfavorable. .un-favorable. Financial leaders, such as Charles R. Gay and Winthrop Aldrich, tend, to the belief . that the second reason is the. most important. They feel that a relaxation cf the Security Act and of SEC regulatory regula-tory practices is necessary.: There will . unquestionably . be a well-supported well-supported bloc in the next Cong- - - ress which will propose modlfica- ti.cn of the Act.: "j So far as the future is concerned, s most economic services . and: coir- urrmists think tne market will re- w main more or -Jess stationary -:, for bl s me time, then start up again late this year or early next year.-. "5 According to Barron's of Octo- ber 18, stocks were about as cheap ,cy then as at the bottom cf the 1932 bear market. They sold at 10.6 times earnings in October, as against 7.25 times earnings in 1932," " and this year money was . much 'sc "easier." '.'', !EC( |