Evening star., 1941-09-22
Defense Needs Bring
Spectacular Gain
In New Issues
August TotoI Nearly
Six Times Previous
l94l Monthly Rote
BY FRANK MacMILLEN,

NEW YORK, Sept. % New
money, poured by American in
vestors into the country's industries,
last month topped s325 900 900, nearly
six times the previous monthly
average rate this year, and nearly
half that Of fabulous 1929, when
everything was fine"
Wall Street men have said for
years that the acknowledgements,
fundamental reason for the depres-
sion of the 'thirties was the reluct-
ance of the American investor.
frightened by higher taxes, political
ideas under the New Deal, and
copious regulation of securities trad
ing and investing, to put their money
to work in trade and industry.
Has turn come, spurred by de-
fense and the booming demand for
civil goods growing out of fat pay
rolls. which is giving the common
opinion of the financial community
a chance to prove or diSprove itself?
While the answer to this question
is not yet entirely clear. money men
said, the definitive reply may be in
the making in the next few months
A. T. & 7. Boosts Total.
In August the country's investors
absorbed a bit over s40O O000,0 900 of
publicly offered securities. The
slightly over s325 900 900 was new
borrowing. The balance was to pay
off debt already existing. The former
went to new plant and equipment:
the latter made no new contribution
to the productive facilities of the
Nation.
That looks like the kind of thing
Wall Street has been asking for.
Is there any catch in it?
The answer seems to be that there
is a partial catch. but perhaps not
as much as the figures would indi-
cate.
1t is true. securities men pointed
out, that the August investment
totals included s233. 600 900 degen-
ture subscription for new money by
the American Telephone & Tele-
graph Co., largest communications
concern in the world, which tended
to throw the figures somewhat out
Equally, however, it was noted. the
remaining amount of almost $780,
100000 of new funds, about twice the
years monthly average. was raised
by such diversified concerns as 9
major oil company. a big Western
railroad for rolling stock, a chain
grocery and others.
Regarded as Significant.
But to some investment bankers
the fact that American Telephone
whose securities are the most widely
held Of any corporation in the coun-
try. had offered a huge new issue OF
debentures-an additional one oi
nearly s100,000,000 from the same
| concern has already been revealed
| seemed to be significant.
One analyst said that while the
unusual size of A. T. & T.'s offerine
threw the latest investing figures
out of kilter bit, the solid success
of the issue with the consumer, "the
investing public" was almost a sure
harblnger of an increase of offerings
by other big companies of securities
to raise new money for additional
plant and equipment.
1t was pointed out that the tele.
phone new money" was needed Il
a major extent for meeting the un
usual demands made on the tele.
| phone system bv defense
Other companies, in a dozen i'm
portant industrial fields. may fee
similar pressure to borrow or sci
stock in coming months, it was sug
/ gested.
Plans launched or talked of II
such major lines as steel making
railroad equipment and power pro
duction call for the expenditure o
several billions of dollars IN the mex
year or two. it was pointed out, anc
many smaller concerns will ais,
need money
Surpluses to Be Used.
Not all the needs of defense
spurred plants for funds for con
struction and inventory would nee
essarily come direct from investors
Much of it. at least for a time, j
was said, would continue to com,
out of corporation treasures, sur,
plus" or unused earnings which
have piled up over long period o
time.
But. some financial observers sug.
gested. this treasur trove of industry
was not bottonless. even though i
has been little tapped for expansion
in recent relatively lean years.
They pointed to the growing tota
of loans by banks to commercial Dor.
roWers to show that the need fol
money in industry engaged in de.
fense production was on the in,
crease.
And, they added, the traditiona
course of management was to USE
this order in meeting any demand
for funds for expansion:
l. Whatever unused or unneedeC
cash or securities are on hand in the
company's treasury.
2. Money borrowed from ranks
which, since it is usually available
for only short periods and then must
be repaid, is not final solution OF
needs for permanent improvements
3. Stocks or bonds sold to invest
ors. the ideal way to get long term
money.