According to the Securities and Exchange Commission, common stocks totaled but $784,000,000. Toward the closing months of the year, common-stock offerings were largely confined to larger companies in the public-utility and oil industries, while the market was virtually nonexistent where other stock offerings were involved. Time and time again the report of anticipated common-stock financing was sufficient to depress severely the stocks of even the strongest and most successful corporations; see page 32 et cetera of our study where we have dealt with this problem at some length. I wish our study had been less correct in its implications.

I have with me and would like to incorporate in the record as exhibit C a tabulation prepared from the records of the Securities and Exchange Commission showing the number of companies which have withdrawn registration statements between January 1, 1946, and January 23, 1948.

The CHAIRMAN. Mr. Schram, have you copies of that? I notice it is not attached to your statement.

Mr. SCHRAM. I am sorry but I did not have time to get these copied. I do have one for the record, and I have a couple of mimeographed copies here for the committee.

The CHAIRMAN. It will be put into the record.

(The document is as follows:)

Purpose

EXHIBIT C.--Security offerings which had been registered with Securities and Exchange Commission but were withdrawn from registration (excluding all offerings for sale by individual stockholders or for refunding purposes only)

[Withdrawn between Jan. 1, 1946, and Jan. 1, 1948, data from SEC registration record]
[Based on offering price if stated, par value of preferred or debentures or market value]

Mr. SCHRAM. These withdrawals comprise 145 issues, mainly stock issues, and I regard them as eloquent evidence of the unhealthy condition of the capital markets.

Mr. Chairman, in connection with this capital market, I have a letter here I would like to read.

Senator LUCAS. Mr. Schram, does "withdrawn" mean that there were no sales?

Mr. SCHRAM. The condition of the market was such, Senator, they just had to take it off the market. They did not go through with the financing program.

Here is an extremely interesting letter from Mr. Price, of the Westinghouse Corp.

I sent out a number of telegrams asking quite a few corporations what had happened to the financing plans which were new, what we call "in the mill."

I received this letter from Mr. Price, of the Westinghouse Electric Corp.:

I have your telegram asking for information to use in your testimony early next week before the Senate Finance Committee regarding the capital markets and their ability to absorb new financing.

In 1946 we proceeded with our plans for selling $50,000,000 of new preferred stock and $30,000,000 of long-term debentures. We withdrew the registration of 1,647,037 shares of common capital stock, from which we had hoped to realize approximately $40,000,000. The reason for the withdrawal was the unfavorable condition of the market for equity financing. It has resulted in Westinghouse being indebted to a group of banks, on a short-term loan, for approximately $80,000,000, instead of about half that amount.

Since the summer of 1946 our common-stock financing plans have been held in abeyance. Fortunately, up to the present time, our inabilty to obtain equity capital in the amount desired, at what we regard as a fair price, has not affected our plant-expansion program because the necessary funds have been borrowed, but obviously it may affect our future plans and decisions.

You may be interested in seeing the attached letter which I sent to our stockholders a few days ago. In my opinion, a continuance of our economy at the dynamic pace set since the reconversion period ended, depends in no small measure on the ability of industry to get equity financing in the months ahead. This, in turn, depends on the attractiveness of common stocks as an investment, and this, again, depends on a sound Government taxing policy.

Very truly yours,

GWILYM A. PRICE, President.

The CHAIRMAN. Would you say that, generally speaking, the same reasons will apply to the withdrawal of the other issues you have listed?

Mr. SCHRAM. Yes.

Of course, I have access to a great deal of information, Senator, with reference to these firms who would like to finance. You can understand why we cannot give names, or discuss them, because they are more or less confidential in nature, and in financing programs, that information must be kept in confidence.

But I can assure you that my checks with the various firms shows they have had to withdraw practically all of the equity financing. It has been a very high rate, and the market will not absorb it.

I checked with a firm just yesterday that deals more in the smaller growth companies, and he gave me a list which I will ask be put into the record.

The CHAIRMAN. It will be put in the record.