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Forty-five per cent of the fifty-six billion dollars used to finance the production of industry in 1943 was supplied by the government, according to a report, "The Financial Situation of Industry after Two Years of War," by Dr. Charles C. Abbott '28, associate professor of Business Economics at the Business School.
Professor Abbott asserts that although the cash balances of business concerns have greatly increased since 1939, the working capital position of manufacturing business is poorer than before the war. The significant aspects of the situation are not the increases in cash and current assets but the ratio of these current assets to liabilities, and the adequacy of current assets to maintain present production levels in the future.
Liabilities Increased
Since liabilities have risen more than assets. Professor Abbott declares that "sound public policy clearly should take account of this fact, and should not make the mistake of assuming that business has excess liquid funds."
According to the report, the great bulk of the government's investment has been concentrated within a few companies in a few industries, so that the number of companies with serious reconversion problems is very small, although these companies are very large employers of labor.
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