Half Billion Per Month

During the first eight months of it required something more than $17,600,000 per day to finance the birth and the growth of U. S. industry. Total new financing up to Aug. 31 reached the figure of $4,231,847,000-money raised at the rate of a half billion a month or six billion a year. This figure included stocks, bonds and notes, but did not include real estate or municipal securities either in this country or Canada. Except for a comparatively small amount of financing by Canadian corporations and by foreign corporations, cities and governments, it represented the money used either to bring new U. S. businesses into existence or to make larger U. S. businesses already established.

Prime absorber of funds were the various security and financial corporations somewhat loosely classed as investment trusts. These companies accounted for no less than $1,494,093,000-or somewhat more than one third of the entire total. Next came public utilities, which got along on $777,191,000. Low on the list were Coal and Construction, high were Aviation and Oil. Ten leaders in new financing were:

Financial companies and investment trusts $1,494,093,000

Public Utilities 777,191,000

Canadian corporations 241,039,000

Oil 220,599,000

Foreign corporations 173,856,000

Aviation 158,741,000

Railroads 153,153,000

Machinery 104,850,000

Chemicals & Drugs 89,036,000

Coal & Coke 84,750,000

The automotive industry absorbed only about $43,000,000 and construction and contracting only about $40,000,000.

Leading Houses. Whence came the $4,231,847,000 total? Ultimately from U. S. pockets, of course, but more directly through financing houses. A financing house takes part in new financing in one of two ways-it either assumes the responsibility of floating the new issue or it participates in floating an issue which some other house has sponsored. In the second case, it is a participant in a syndicate, in the first case it is the syndicate head, except when it does not invite any participants but handles the entire job itself, Most houses are syndicate heads in some issues, participants in many others. The lordly House of Morgan, however, is never a participant. During the present year Goldman, Sachs & Co. and G. L. Ohrstrom & Co., Inc., have also handled no issues except those in which they were the leaders.

The following table shows the ten leaders from the standpoint of business totaled (figures in millions of dollars)

Syndicate Participant Total

Harris, Forbes Co. 319.8 249.4 569.3

National City Co. 221.2 431.3 652.5

Bancamerica-Blair Corp 172.7 166.7 339.4

Goldman, Sachs & Co 160.8 -- 160.8

Dillon, Read & Co. 159.9 129.0 288.9

Lee, Higginson & Co. 155.7 257.2 412.9

Chase Securities Corp 141.0 125.7 266.7

J. P. Morgan & Co. 124.8 -- 124.8

J. & W. Seligman & Co. 106.5 13.5 120.0

Otis & Co . 104.7 75.2 179.9

Stock Issues. In spite of present popular concentration upon stocks rather than bonds, stock-investment is comparatively a recent fashion and most of the First Ten Houses, longestablished, conservative, still have more bond than stock issues. Thus while J. P. Morgan & Co. underwrote Alleghany Corp. bonds, it was Guaranty Co. of New York which handled Alleghany's common and preferred stock. Chase Securities, Halsey, Stuart & Co., Inc., Kuhn, Loeb are other examples of financing houses that are not much associated with stock issues of market favorites. Goldman, Sachs & Co., on the other hand, has this year underwritten nothing but stocks, is perhaps stock-house preeminent. The following table shows the stock issues with which the First Ten are more readily identified:

Harris Forbes & Co.

American Founders Corp. ($15,000,000 preferred at 99)

General Gas & Electric ($430,000 common at 39 1/2)

General Gas &Electric ($250,000 preferred at 95)

American and Continental Corp. ($325,000 common at 40)

National City Co.

United Aircraft & Transport (15,000 units at 1000)

Wesson Oil &; Snowdrift (400,000 preferred at 72 1/2)

Cooper-Bessemer Corp. (1000 units at 660)

General Mills Inc. (61,068 at 77)

Bancamerica-Blair Corp.

Petroleum Corp. of America (3,250,000 capital at 34)

Curtiss Airports Corp (2,500,000 capital at 12 1/2)

Goldman Sachs & Co.

Minneapolis-Moline Power Implement Co. (100,000 preferred at 101 1/2)

Minneapolis-Moline Power Implement Co. (219,680 common at 41 3/4)

Shenandoah Corp. (1,000,000 common at 17 1/2)

Shenandoah Corp. ($50,000,000 preferred at 50)

Blue Ridge Corp. (1,000,000 common at 20)

Blue Ridge Corp. (1,000,000 preferred at 51 1/2)

Dillon, Read & Co.

A. G. Spalding & Bros. (50,000 common at 65)

Pennsylvania Industries Inc. (50,000 units at 110)

Central States Electric Corp. ($10,000,000 preferred at 100)

Lee, Higginson & Co.

Shell Union Oil Corp. ($40,000,000 preferred at 98)

Solvay American Investment Corp. ($25,000,000 preferred at 100)

J. &; W. Seligman & Co.

Tri-Continental Corp. ($25,000,000 preferred at 104)

Briggs & Stratton Corp. (108,500 capital at 34 1/2)

Otis & Co.

The United Light & Power Co. (500,000 preferred at 100)

Continental Shares Inc. ($24,000,000 preferred at 99)

Commonwealth Securities Inc. ($10,000,000 preferred at 99)

Harris, Forbes & Co. began in 1882 as N. W. Harris & Co. At that time Founder Norman Wait Harris had an office on Chicago's Clark St., three employes and $30,000. But he also had two ideas. First idea was to send salesmen out to sell bonds. In 1882 such procedure was regarded as undignified; Mr. Harris and his men were termed doorbell ringers. But Mr. Harris knew that he, small, new, obscure, would never prosper by waiting for investors to call upon him, so he rang the doorbells, sold the bonds, became ancestor of all bond salesmen since.

Second idea was to specialize in municipal bonds. In 1867 Mr. Harris had traveled through the south and west, had seen countless small but growing towns and cities. Farsighted, he looked ahead, saw the school houses, water works, roads, bridges, sewage plants and other public works of the future. Shrewd, he saw also the billions of dollars in bond issues that these communities would need. "I did not tell even my brother my estimates," he once said, "for fear he would think I was out of my head."

Founder Harris died in 1916. By that time N. W. Harris & Co. opened a Manhattan branch in 1890. This branch thrived under the direction of partner N. Wetmore Halsey* and later of partner Allen B. Forbes and became Harris, Forbes & Co. There are today Harris, Forbes & Co. branches in Boston, Montreal and London, the original N. W. Harris Co. survives in the Harris Trust & Savings Bank of Chicago. Mr. Forbes died in 1923, and Lloyd W. Smith, Harris, Forbes president since 1921, became also chairman.

A modest and a conservative gentleman, Mr. Smith does not give out pictures, interviews, discussions of topics of the day. He graduated from Yale in 1895, went into the Harris, Forbes organization, worked gradually to its top.

It is said that every U. S. city with a population of more than 100,000 has put up part of its public buildings with bonds marketed through Harris, Forbes & Co. As a logical development of its municipal business, the company has in more recent years become almost equally outstanding in the field of public utility finance.

* Founder of N. W. Halsey & Co., now Halsey, Stuart & Co., Inc.