New Financing Adjourned

A Wall Street market player has to be punchdrunk and nearly broke to cheer when the ticker tape stops moving. But last week such an intermission was welcome to the Street. The market turned on its side (at around 115 on the Dow-Jones industrials average) and lay still. Wrote New York Post Columnist Samuel Grafton: "The 'better technical position' assumed by the investor consists of his lying flat on his back in the gutter with one foot on the curb, his eyes closed and his mouth open. In this position he neither buys nor sells, and so is described as 'steadier.' "

Prices were steady, to be sure, but volume was a meagre 3,512,000 shares for the week, in contrast with 17,100,000 shares during Panic Week I, 10,378,000 shares during Panic Week II. Traders, with time to look around, saw plenty of bargain price tags on stocks which a National Defense boom might turn into big earners, but a $20,000,000,000 drop in security values in three weeks had beaten all the buying power out of them.

Meanwhile, war panic had practically shut down the market for new capital.

First new issue to suffer was Morgan Stanley's $75,000,000 of U. S. Steel debentures, which came out the second day of the bear market. Syndicate members were still holding almost 10% of the issue after four days. Next week Morgan Stanley pulled the price plug from under the market, freed dealers to sell the last $1,390,000 at any price they could get. Same week, Montgomery Ward postponed a $31,000,000 offering of common stock sine die.

Nastier burns were suffered by underwriters of two issues in the U. S.'s most up-&-coming industry--aviation. Captain Eddie Rickenbacker's Eastern Air Lines came to the market May 27 via Smith, Barney & Co. (which is still licking the wounds left by the ill-fated Pure Oil issue in the 1937 bear market). In April Eastern had gone up above 44 on the big pre-panic move in airline stocks, early in May was still there. The new issue offered 110,909 shares to stockholders at $32 when it was around 39 on the market. Last week, as Eastern was traded in the market at around 32,104,545 shares unsubscribed by stockholders were publicly offered at $30.75.

The other big disappointment was a war-baby issue -- Boeing Airplane Co., which has given balding, brusque & burly President Philip Johnson plenty of grief as a result of its costly development of four-motor planes, is $4,740,000 in hock to RFC. Of 360,979 shares offered stock holders at $16 a share (mainly to repay the loan), last week 88,248 were still un subscribed and went on public sale. The stock was quoted on the market at 15 and a fraction, but some individual syndicate members were offering wholesale blocks of it at 15, even 14, finding no takers.

Many more issues, which had been in the works for some time, were postponed indefinitely. One of the first and biggest of these was Indianapolis Power & Light, which had successfully floated new common stock in April (TIME, April 15), was ready to refund $32,000,000 of 3 3/4% bonds just as the panic began. Lehman Bros, put the issue back on ice. W. C. Langley and Halsey, Stuart did the same to $12,660,000 of mortgage bonds of Iowa Southern Utilities. Other long-planned issues, postponed:

> Swift & Co. had tentatively agreed with Glore, Forgan & Co. last April to sell its control of Libby, McNeill & Libby to the public; 3,018,000 shares were to have been filed with SEC May 18.

> Celanese Corp. of America, riding a record rayon boom, had planned to call $16,481,800 of 7% preferred, substitute bonds costing it half as much a year. When the market returns to "normal," need of new money for expansion will bring the planned Celanese issue to $30,000,000.

> Scovill Manufacturing Co., facing a copper & brass fabricating (for ordnance) boom, had planned to help widen this possible bottleneck by selling $8,374,000 of new debentures and $15,000,000 of new capital stock, refund $7,850,000 of 5 1/2% debentures at the same time.

> A. P. Giannini's Bank of America, fresh from 1 8 months of mutual strafing with the New Deal, had agreed to raise $30,000,000 of new capital by selling 600,000 shares of preferred stock to present stock holders, including his dominant Transamerica Corp., the unsubscribed balance to the public (TIME, May 13). After the private offering to common stockholders hit a stone wall, the underwriters (Ladenberg, Thalmann, Otis & Co. and John J. Bergen & Co.) called it a day for the duration of the panic.

Last week seekers of new capital were scared and scarce. Most interesting issues filed with SEC were two small registrations of common stock. One was for Timm Aircraft Corp., which has a new plane molded out of plastics (TIME, June 3), proposes to offer holders of its 625,005 shares 215,835 new ones at $1 a share. The other was for a marginal plane-engine maker, Continental Aviation & Engineering Corp., a subsidiary of a Detroit back number, Continental Motors. It plans to sell the public 260,000 shares at $3.25 a share through Van Alstyne, Noel & Co. as soon as the 20-day waiting period is up.

But for one class of borrower, the collapse of security purchasing power had a silver lining. This was the large and prosperous corporation with plenty of cash.

Taking advantage of bargain prices, many such corporations bought their own securities back from the public--in many cases, at handsome profits under liquidating values and redemption prices. Biggest corporation to announce that it would do this was the $67,200,000 Lehman Corp., whose common closed the week at 18 1/4. Among others doing it: Paramount Pictures, United Fruit.

Most surprising redemption was that by New York Shipbuilding Corp. Its 7% preferred, long inactive, was last traded May 21 at 103 3/8. Suddenly New York Ship announced that it would redeem 17,850 shares at no plus back dividends of $24.50 a share. While the rest of the market slumped or sidled, New York Ship's preferred opened May 27 at 114, soared after the redemption announcement to 134-1/32. New York Ship (TIME, May 20) is a leading beneficiary of Franklin Roosevelt's five-year-old naval and merchant marine construction boom. To holders of other capital-goods securities, landlocked by heavy arrearages, New York Ship's performance was a pleasant omen of what they may expect when National Defense moves inland.

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