Music Trade Review

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WASHINGTON
T H E Federal Reserve Board has
indicated that restrictions on con-
sumer credit ought not to be removed
when automobiles, pianos and other
durable goods begin to hit the market.
A continuing need for regulation of
installment buying and charge accounts
•—as a check on inflation until plenty
of goods becomes available—is out-
lined in the recent Federal Reserve
Bulletin.
Federal Reserve officials said the
article is analytical in nature and
should not be regarded as a statement
of what the government will do.
The board said that when the first
trickle of durable goods appears, patri-
otic restraint on spending may dimin-
ish and there will be a strong demand
for the goods.
"If credit were permitted to augment
this demand before goods were avail-
able in adequate amount, pressure on
the market would be excessive," the
bulletin said.
"It will be far better to preserve
the unused credit capacity of consum-
ers' durable goods will have been satis-
fied, and when support for a high level
of production and employment will be
needed."
IN a report approved by Henry A.
Wallace, Secretary of Commerce,
the Small Business Advisory Commit-
tee of the Commerce Department has
recommended wide tax reductions and
Government-guaranteed loans for pri-
vate enterprise.
It is suggested, as well, that the de-
partment provide "management aid"
to small business on an unprecedented
scale, both as to internal operations
and management and such "external"
matters as competition and foreign
trade.
The Small Business Advisory Com-
mittee was appointed by Mr. Wallace
soon after his own appointment as
Secretary of Commerce and was asked
24
to advise the department "concerning
the type of activities in which it should
engage in order to be of service."
The committee's tax proposals are
these:
An increase, effective on Jan. 1,1946,
from $10,000 to $25,000 in earnings
exempted from the excess-profits tax.
Repeal of the excess-profits tax effec-
tive at the beginning of the year fol-
lowing the end of the war with Japan.
Allowance for corporations to take
their 10 per cent excess-profits tax
credit for 1944 and subsequent years
as a deduction against tax payments
for those years.
Advancement to Jan. 1, 1946, of the
maturity of bonds representing 10 per
cent excess-profit tax credits for 1941
through 1943.
Modification of the carry-back pro-
visions to allow postponement of cur-
rent tax payments on the previous
year's taxes to the amount of estimated
refunds accruing under present pro-
visions as a result of subnormal earn-
ings.
While the committee did not make
general or final recommendations for
a postwar tax structure, it did suggest
that even further tax relief would like-
ly be required for small firms and that
the Commerce Department should
study at once the desirability of reduc-
ing, as of the first of next year, both
the normal taxes and surtaxes.
As for "the many steps needed" in
the more distant future, "to create an
environment in which the launching
of small business is not discouraged,"
the committee proposed repeal of the
capital-stock tax and the declared value
excess-profits tax and amendments to
permit businesses to carry forward
their business losses for a period of
six years.
On the point of credit aid to busi-
ness, the report recommended Govern-
ment guarantee of loans made by pri-
vate institutions to finance both new
and established small concerns.
HIGH LIGHTS
Special Type of Loan Urged
"A special type of term loan," it
added, "should be developed for the
long-term financing of small business.
Adequate provisions should be estab-
lished for amortization, but the com-
mittee emphasizes the necessity for
flexibility in these and other provisions.
The interest rate charged should be as
low as is consistent with economic con-
ditions. Loans for at least ten or fif-
teen years should be contemplated."
INDUSTRY has received the assur-
ance of J. A. Kru Board chief, that all possible regula-
tions and production restrictions would
be lifted after the defeat of Japan to
lay the foundation for a resilient and
rapidly expanding economy.
The War Production Board, said Mr.
Krug in a report on reconversion, had
already set in motion a program that
would leave the "what and how" of
production to manufacturers and con-
sumers.
Any effort to exercise control from
Washington, he added, would mean "a
myriad of rules and regulations" that
could only get in the way of reconver-
sion, not speed it.
"Staggering" Postwar Demand
He pointed out that the United States
was much better prepared for recon-
version now than it was in 1918, and
he predicted that a year from now the
country would be turning out durable
civilian goods at an annual rate of
$16,700,000,000, about 30 per cent
more than it was producing in 1939.
Mr. Krug cited figures to show that
Americans would have spent $120,000,-
000,000 on civilian goods in 1944 alone,
if there had been goods to buy. Con-
sumers were likewise unable to spend
their incomes as they normally would
have in 1943 and 1942.
THE MUSIC TRADE REVIEW, JUNE, 1945