In the Offing

For construction, maintenance, refunding old debts, U. S. business needs money badly. Normal method of getting it is by selling stocks or bonds. But since last fall's market crash and the fiasco which resulted when the public refused to buy

$44,000,000 in new Pure Oil stock, underwriters have been lying low. As a result new corporate financing for the first quarter of 1938 amounted to only $111,000,000, a three-year low. That this jam could be broken was indicated by the successful disposal of two big bond issues, Appalachian Electric's $67,000,000 in February and Consolidated Edison's $60,000,000 fortnight ago. Last week brought more evidence that the capital market is opening up: one new issue was sold, three more were announced.

P: To get $14,600,000, largely for new construction, General Foods Corp. sold 150,000 shares of new preferred stock. Offered at $101 a share--through 39 underwriting firms headed by Goldman, Sachs & Co., Lehman Brothers, Brown, Harrison & Co., First Boston Corp., Smith, Barney & Co. and Kidder, Peabody & Co. --the issue promptly went to a premium at $104, was oversubscribed in an hour. C. One of Myron Taylor's prescriptions for U. S. Steel Corp. when he was elected its finance committee chairman in 1927 was a realistic appraisal of its funded debt. In 1929, in the biggest industrial refinancing in U. S. history, he wiped out virtually all of it--$295,000,000--with money taken from surplus plus a $142,000,000 issue of common stock. But between 1932, when Myron Taylor became chairman of the board, and 1935 Big Steel lost $100,000,000. New plant construction & improvement took $123,000,000 in 1937, is expected to amount to $80,000,000 more in 1938. With steel production again on the skids, this added up to a pressing need for cash. Three months ago U. S. Steel borrowed $50,000,000 from Pittsburgh, Chicago and Manhattan banks. Last week, to retire the loans and get the money for 1938's construction, Myron Taylor's successor, young Edward R. Stettinius Jr., announced his first big financial operation: flotation of $100,000,000 in ten-year debentures, to take place next month under the wing of Morgan Stanley & Co.

P: For refunding purposes, Philip Morris & Co. filed with SEC a registration statement for 77,873 shares of new preferred stock and 77,873 shares of common for conversion rights. Price of each will be determined later.

P: To pay off mortgages, increase working capital, redeem sinking fund bonds and pay for some new construction, National Gypsum Co. filed a registration statement for $3,500,000 in debentures.

Commented the New York Times: "Not in about ten months has there been a more imposing total of new bond issues in the offing. . . ."

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