Business: Dodge Sale

Though Clarence Dillon’s spectacular purchase and sale of the Dodge Brothers Automobile Co., now Dodge Brothers, Inc. (TIME, Apr. 13, 20), is largely completed, the shouting about it is not. Indeed, the speculators and brokers of the Stock Exchange are still keenly interested in the matter. The new Dodge shares were listed on the Exchange on a “when issued” basis, , before the actual stock certificates were printed. Subsequently, open contracts made on this basis were settled by the delivery of interim certificates for the preference stock, and of interim receipts for the 6% gold debentures. When the permanent stock and bond certificates are engraved, they will in turn be substituted for the interim securities now outstanding.

From their entry on the Exchange market, the preference shares have sold at their issue price of 100, or better. At first, dealers who had sold more shares than they were subsequently able to obtain from the syndicate were forced “to buy what they needed in the market. As a result, the price rose slightly over 103. It then declined to 100 and a fraction, and there it stayed. Wall Street, as usual sceptical, is now wondering how many shares the syndicate is having to buy* to keep the price at this figure so consistently. Incidentally, this factor will determine the profits of the syndi cate in the deal. The payments made for the new Dodge securities proved a considerable influence on Wall Street money rates for a time, and tended to produce cheaper money there by the rapid piling up of funds in Manhattan banks.

<footnote>*It is a usual practice, when a large offering of securities is made by the syndicate to the public, for the syndicate to place a market order to buy at about the price of the offering. Thus the market price of the security is kept at or above the syndicate price until the offering is largely dosposed of.</footnote>