Evening star., 1938-05-08
$10O,OOO,0O0 Steel Issue
Regarded as Forerunner
of Capital Revival.
BANK CREDIT BASIS
MORE THAN DOUBLED
At Least Another Billion Expected
to Be Added-Campaign for
Harmony Significant.
BY FREDERICK GARDNER,
Associated Press Financial Writer.

NEW YORK, May THE battle
for business recovery has moved for
ward rapidly recently with maneuvers
to bring billions of dollars out of hid
ing and idleness back to the firing line
Of industry.
Wall Street saw today tangible re-
suits OF the drive to put money back
to work in these developments last
week:
A move by United States Steel Corp.
to market $l00,00O.00O in bonds to
raise funds for its plant modernization
program. the biggest industrial loan
for capital improvements since 1929.
Preliminary steps and discussions by
several other large corporations to
undertake new financing in what look
ed to many Wall Streeters like revival
Of the capital market
Broader demand In security mar
kets for high-grade bonds and other
investments. giving impetus to a re-
covery from the early spring decline. =
Capital Returns to Paris.
A heavy return flow Of boarded cap
ital to Paris after further devaluation
Of the franc and pledge by French
authorities no further cut in the gold
value Of the currency was planned.
Wall Street saw Washington un-
timber its heavy guns in the campaign
to put money to work through the re-
cent cut in bank reserve requirements
and release Of impounded gold into the
credit structure. These steps i'm
mediately added more than $500 000,-
900 to the credit base on which banks
may expand loans and investments
Surplus lendable funds in member
banks Of the Reserve system have
more than doubled in recent months.
They approximate s2,500, ,000,0 900 and
are expected to increase by at least
another billion as the Treasury pays
out the 81 400 200, 900 in "desterilized'
gold under its redit-expansion drive
Meanwhile Wall Street men read
Washington developments for i'm
provement Of relations with business
as holding strategic key to the efforts
to get idle money to. work.
Utility Buying Cited.
Greeted by many brokers as sig
nificant indicator Of the way the tide
was moving was brisk buying of long
neglected utility shares Friday, fol-
lowing the Pittsburgh plea Of S. E. c.
Commissioner John w. Hanes for
peace in the controversy over Govern
ment regulation Of utilities and for
business cooperation with Govern
ment.
Peace in the electric power contro-
versy, some Wall Streeters held, would
go far toward expediting the back-to-
work movement Of capital.
Other industrial and utility con-
Germs were rumored in bond circles
preparing to follow United States
Steel in taking advantage of improve
ment in security markets and the
great pool of idle funds to raise capital
for plant expansion and for cutting
interest charges in debt refunding
operations.
Except for scattered issues, new
financing has been stagnant since
security markets went into a decline
more than a year ago. Public offer
ings of new corporate loans the last
few months have been about the
smallest in five years.
Regarded rs Promising.
Investment dealers looked forward
to the big Steel" and other offerings
under preparation for June and mid
year sale as promising one Of the best
clues to prospects for autumn busi-
ness improvement.
Reopening Of the capital market
to industrial borrowings, they pointed
out, could have far-reaching conse-
quences for steel, building, machinery
and other heavy industries dependent
upon large-scale capital investment In
production facilities.
The French franc devaluation re-
minded Wall Street bankers OF the
billions reputed to have been boarded
in New York, London and other money
centers in recent years for protection
against currency depreciation.
Much Of this money quickly would
go back to work once confidence in
currency stability returns, bankers
contended. Hence there was wide
hope in financial circles the latest
franc devaluation marked the final
major operation on leading interna-
tional currencies.
The British pound and the American
dollar, the chief monies of world trade,
have settled the last four years into