monday, October 13, 1970
page 2
daily nebraskan
Economist: 'We're running a costly
club
. By Marian Lucas
"We're running a country club where
the dues are too high,' a member of the
Federal Reserve System's board of
governors said Saturday morning.
' Economist Robert Holland toH
members of an open student forum that
the monetary problem of New York City
is a result of what he called their "social
spending."
He said if the city defaults, Nebraskans
also will be hurt, and added that New York
City hasn't shown enough self-effort to
justify the nation's assistance.
If the city made a gesture such as voting
a significant tax increase, Holland said it
would get the nation's sympathy. Nebraska
citizens then could raise their taxes one
per cent to aid them, he said.
The Federal Reserve System has a
tremendous net yield, Holland said.
"It's a great advantage when you pay
two cents to produce a one dollar bill,"
Holland said. "That's our profit margin."
Holland, whose three day visit was part
of the College of Business Administration's
executive-in-residence program, said
America is experiencing a succession of
economic shocks to its financial institu
tions and markets.
"How much different the adjustability
of markets and institutions are rests on
the fact that financial markets are more
adjustable than financial institutions,"
Holland said. i v .
Markets adjust, he said. If New York
City defaulted next week, there would be
a great shock wave, but the markets would
conform, he said.
He added that, by their nature, markets
are "bumpy, unfair and ruthless."
However, Holland said that although
financial institutions are valuable to
capitalism, their adjustability is inhibited.
Great strains and stresses are put on these
institutions to readjust, he said .
Institutions, including banks, savings
and loan companies and insurance
companies, have grown because of markets,
Holland said. "They are go-betweens
among borrowers and savers," he said.
Future directors of these institutions
will need foresight to prudently manage
them so they absorb these adjustments
Holland said.
He said he would like membership of all
banks to the Federal Reserve System made
mandatory.
"Wherever banking work is done, it
ought to carry the burden of reserve re
quirements," he said. :
With respect to a change in the Social
Security System, Holland said he
advocates moving the retirement age up.
Even if the age requirement were moved up
one month every year, he said, it would
change the burden problem and the fiscal
outlook.
Montgomery Ward executive:
Consumer confidence slowly rising
doily ft
ten
A shift in consumer spending is occur
ing, the executive vice president of finance
of Montogomery Ward and Co. said Friday
afternoon.
Chicagoan Gordon Worley, who spoke
to an open student forum as part of the
College of Business Adminstration's
executive-in-residence program, said
consumers shopped around much more
before making purchases last year.
Customers, now are buying lower priced
promotional items, he said.
"I think you've seen some trading down
in the last 18 months among consumers
and stores," Worley said.
Consumer confidence is up, but is
increasing slowly, he said. He added that
the Midwest has a stronger economy than
the East. .
The retail business has improved over
the last four months, he said.
However, Worley said a rise in the
number of individual people filing for
bankruptcy has been discouraging. These
bankruptcies, he said, seem to originate
from the same law firm.
According to Worley, the American
consumer has done well in the recession.
He said customers stopped buying when
they saw they couldn't pay for an item.
Montgomery Ward has had increased
credit losses, he said. Among 6 million
credit accounts, 40 per cent of the store's
credit losses are in bankruptcy, Worley
said.
"We think it's a bad trend," he said.
Generally, I think it (bankruptcy) had
been abused in our system."
Montgomery Ward Co., Worley said, had
a total sale of $3.5 billion last year among
their 465 retail stores and catalog sales.
Worley said the secret to lower prices
is that Wards buys in large quantities.
Without their volume, manufacturers
costs would go up, he said.
Although he said there is a place for the
department store, Worley said he thinks
the consumer gets more quality in a chain
store.
Worley, formerly of Lincoln, said
Montgomery Ward Co. has continued to
expand even though costs have risen
because they built up a large cash reserve
oetween lywand 58.
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Editor-in-chief: Rebecca Brit, News Editors
Randy Gordon and lori Demo, Managing Editor
Stan Linborst, Associate Newt Editor: Gina Hills'
Layout Editor: Michele Schmal, Sports Editor
Larry Stunkel. Third .Dimension Editor: Vine
Boucher, Business Manager: Jerri Haustler
Advertising Mawageri Mary Ann Myers'
Production Manager: Kitty Policky. '
Second Class? Postage paid at Lincoln, Neb..
58501.
Address: The Daily Nebraskan, Nebraska
Union 34, 14th and R streets, Lincoln, Neb.
68508. Telephone: (402) 472-2588.
The Dairy Nebraskan It published by the
Publications Committee on Monday, Wednesday,
Thursday and Friday through the autumn and
spring semesters.
Copyright 1975, the Daily Nebraskan.
Material may be reprinted without permission if
attributed to the Daily Nebraskan, except
.material covered by another copyright. '
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