Jam Breaking?

Addressing their stockholders last week the chairmen of the two biggest banks of the U. S. both saw fit to make pointed references to one poignant topic. Said Chairman Winthrop Aldrich of Manhattan's Chase National Bank: "Since 1933 the volume of new issues, and especially of stocks, has been a fraction of what it ought to be, and, indeed, of what it was in our last normal financial year, 1923, or 14 years ago."

Said Chairman James H. Perkins of Manhattan's National City Bank: "I know of no corporation of size in the country that could put out an issue of common stock today with any hope of successful flotation unless offered below its fair value. If we can determine correctly why this is so we shall have diagnosed our economic problem. . . ."

Having exceeded a billion dollars in 1936 for the first time since 1929, the volume of new financing dwindled away to a paltry trickle late in 1937 when two big issues met disaster in the same week. One of these (some $44,000,000 in Pure Oil stock) had to be impounded when the public refused to buy and the other ($48,-000,000 in Bethlehem Steel debentures) could be sold only at a loss of about $1,725,000 to the underwriters (TiME, Oct. 18). Since then by conservative estimate $150,000,000 in new financing has been held back in hope of a better market. Last week, just as bank officials were bemoaning the situation, came evidence that a better market--not perhaps for common stock but at least for bonds--might be on its way.

Last fall Consolidated Edison Co. of New York pondered selling some $80,000,000 in securities, part new money, part refunding. These plans were curtailed by market conditions, but last week hard-headed Morgan Stanley & Co. decided to test the temperature of financial waters with a $30,000,000 issue of Consolidated Edison debentures. Morgan Stanley is the underwriting offshoot of J. P. Morgan & Co. and any work that is done in its chaste Georgian office is pretty sure to be well done. Last week proved no exception. Issued at 101 1/4, the bonds promptly went to a premium of 102|. Morgan Stanley ended the day by wishing it had offered the original $80,000,000. Meanwhile it completed plans with Bonbright & Co. for issuing next week $9,000,000 of first mortgage bonds of Consumers Power Co. Other evidence last week that the jam of new financing was finally breaking: Appalachian Electric Power Co. filed with SEC a proposed issue of $67,000,000 in bonds to be offered by Bonbright & Co.

This file is automatically generated by a robot program, so reader's discretion is required.