Evening star., 1940-06-03
Corporate Financing
To Be at StandstiII
In Current Week
Sharp Market Slump
Delays Important
Security Offerings
BY PAUL d. GESNER,

BY PAUL D. GESNER,
Associated Press Financial Writer
NEW YORK, June 3.-NeW corpo-
rate financing is expected to come
to a complete standstill in capital
markets this week.
There may be some sales of mu-
nicipal issues, but offerings of new
securities by corporations are likely
to be nil
Not since the week of Septem-
ber 8 last year, when the shock of
the declaration of war by England
and France against Germany jar
red Wall Street have capital mar
kets coursed through six-day busi-
ness period without new corporate
offerings of some sort.
A number of substantial new cor
porate issues were in sight early
last month just before German in
vasion of loWland countries and
France tossed the stock market into
slump which pared around 25 per
cent from going market values.
United States Steel Corp. was on the
Threshold of offering s75,000,00O
debentures. Texas Corp. was plan
ming an offering of $4,000, 900 bonds,
and Indianapolis Power g. Light
Corp. was preparing to sell S32,-
100000 of 3H per cent bonds and
140,591 shares of preferred stock.
U. S. Steel Gross Ahead.
United States Steel went ahead
with its offering, and officials de-
clared themselves satisfied with the
operation, although the entire
S75,000000 was not disposed of the
first offering day. Texas Corp and
Indianapolis Power g. Light Corp,
both of whose issues were in regis
tration with the Securities and Ex-
change Commission when the Ger
man LoWlands invasion started,
elected to defer sales until such
time as capital markets we're less
unsettled by war conditions abroad.
Complete absence of offerings this
week would compare with only
$2,500,000 last week and S112,005, 900
year ago.
There has been some talk in un-
derwriting circles that if the ma
tional defense program is pushed
ahead rapidly, spending of part of
nearly $5,000.000,000 of Federal
funds for new airplanes, trucks and
other war defense supplies may re-
quire considerable expansion of
present American industrial plant.
Linked with plant expansion, some
feel, may be new capital borrow
ing. However, many observers think
wide corporate borrowing for plant
spending may not develop very
quickly, for most big corporations
currently are we'll supplied with
cash and would use Immediately
available funds before resorting to
expanding capital or widening debt.
Federal Aid Ready.
In regard to raising of funds for
retooling peacetime machinery for
the making Of ornaments and the
building of new factory units to
widen production, there is also the
likelihood that Government agen-
cies such as the Reconstruction FL
nance Corp. may provide ready and
immediate loans, making unneces-
sary at first the public sale of
securities.
For the first five months of this
year, new security offerings totaled
81 ,095 053, ,808, compared with $685.
826,653 in the like 1889 period. Few
investment men, however, think the
aggregate for the full year 1910 will
top the full year 1899 if unsettlement
continues.
Disruption of capital markets by
the war shaved new offerings in
May to $l09, ,119 ,689, the lowest in
many months. In April offerings
had totaled 1902 1896 ,227, and in May
last year $114094, 1894.
The volume of new securities
slated during May, but postponed
because of war conditions aggre-
gated almost $4,000 900.
Dearth of new securities is felt
most by big insurance companies
and other financial institutions
whose vaults are bulging with cash
seeking investment. Some insurance
concerns, for instance, receive pre-
miums from policyholders in the
mails each day aggregating from
$500,000 to $1,000 per concern.
AS long as incoming premium money
lies idle 1t earns no interest.
A friend once asked the president
of a big insurance company what
his job as 'top man" really was.
Every morning when I come to
work." the insurance company presi-
dent said, II find a million dollars
in cash on my desk. 1t is my job
to invest that million dollars before
I go home at night, for the next
morning there will be another mil
lion dollars waiting"