The Plight of the Stock Exchange

Abstract

THE YEAR 1953 was another active one for commerce, industry, and finance in the United States. The National product reached $367 billion. This figure includes for destruction, that is, both defense weapons and additions to plant and equipment. Nevertheless, production of civilian goods per man per day probably approached record proportions. In the financial field, bank clearings exceeded $1 trillion ($1,000,000,000,000) for the first time in history and confirm in another way a record turnover of goods and services. Not only did much money change hands in the ordinary course of trade; consumer debt also rose sharply, and a great deal of long-term debt was incurred by states, municipalities, and private borrowers. Corporation managements that a generation ago would have shuddered at the thought went freely into debt at the peak of a boom. After all, was it not fashionable to argue that, with high corporation taxes, the Government in effect paid a large proportion of the interest charges, and that in 1953 borrowed money had the additional virtue of increasing the invested capital base for excess-profits tax? No one cared to be reminded that interest-and sinking fund-like all other expenses had to be met with what cash dollars remained after the heavy tax payments!