Thin Sliver

Frosty, white-haired President Francis Edward Frothingham of the Investment Bankers Association of America has a watch which, besides telling the time, boasts a chime, a barometer and a gadget that registers how the moon will be each night. Last week as I. B. A. gathered for its annual convention at White Sulphur Springs, W. Va., the moon was only a thin sliver -- an appropriate symbol for the investment banking business. Keynoted retiring President Frothingham: "Broadly speaking, there has for some time been no flow of new capital, the capital that employs men. From an average of $5,000,000,000 of new capital raised annually in 1924 to 1929, this has fallen to only $500,000,000, or to one-tenth, for 1932 to 1937. . . ."

This familiar dearth of new financing was admittedly I. B. A.'s big problem, but last week the 585 merry conferees produced no new explanations for it, no new remedies. In his opening address Banker Frothingham gave measured expression to I. B. A.'s usual explanation--that the New Deal is to blame. Said he: "Business still feels the gravest concern and hesitancy to venture, in the atmosphere of restrictions and penalties that confront it." Nonetheless, Banker Frothingham gave the New Deal praise for right motives.

Aside from reviewing over-the-counter market regulation, only major issue oi last week's gathering was the proposed elimination of tax-exempt securities. After hearing Chief Counsel John Philip Wenchel of the Bureau of Internal Revenue expound the New Deal doctrine that tax exemption should be ended in order to pump stagnant savings into use, then hearing Banker David Wood rebut with the standard argument that taxing tax-exempts would violate State rights, the assembled investment bankers resolved in favor of eliminating tax exemption on future issues. But this was no New Deal yessing, for banishing of tax exemption would mean a better market for ordinary corporate bond issues I. B. A. members underwrite.

To succeed President Frothingham the I. B. A. chose a banker from as far away from Wall Street as possible -- sunburned, zestful Jean Carter Witter of the California firm of Dean Witter and Co. At 46, Jean Witter is the crack security salesman of the Pacific Coast. Said Banker Witter last week: "I should like to put down as the first item on our schedule for 1938-39 -- work with the SEC in carrying out the objectives of the securities legislation it is obligated to administer "

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