Business & Finance: Transamerica into Telephones

Potent in banking, Transamerica Corp. also has an interest in many an industrial such as General Foods. Last week it became associated, on an international scale, with a major utility. Prelude to the deal was formation of General Telephone & Electric Corp., whose primary purpose will be to extend the development of Associated Telephone & Telegraph Co. Behind the new company with Transamerica are Theodore Gary & Co. of Kansas City ($20,000,000 stock to be taken by them) and British interests who have participated with Theodore Gary & Co. in Associated’s development (to this group: $6,000,000 worth of stock). Chief of these British associates is Sir Alexander Forbes Proctor Roger, director of some 20 companies, chairman of several. Of these, British Insulated Cables, Ltd., is most potent.

Because of the vastness of American Telephone & Telegraph Co., otherU. S. interests in the telephone field have long been overshadowed, little known. But the rise of Theodore Gary, onetime lightning rod salesman, in the telephone industry has been dramatic. In 1897 he bought out a small system in Macon, Mo., soon extended his field in all directions. What seemed the culmination of this career came when, with his British backing, he formed Associated Telephone & Telegraph in 1926. This company took over none of the Gary telephone systems in the U. S., but makes equipment in the U. S., also has manufacturing plants in Great Britain and Belgium. In this field it runs into competition with International Telephone & Telegraph. Its customers include the government telephone systems of Great Britain, Australia, Japan, also some subsidiaries of A. T. & T. The company and its subsidiaries operate 300,000 telephones having systems in British Columbia, Portugal, Colombia, big investments in other systems. Despite its international nature, Associated’s principal headquarters are in Chicago.

Long closely associated with his father in telephonic maneuvres has been Hunter Larrabee Gary. When the new company was formed last week it was announced that he will be its chairman. Other of his activities include a directorship on the Missouri-Kansas-Texas Railroad, vice-chairmanship of Commerce Trust Co. of Kansas City (largest bank in loth Federal Reserve District). Deprived of eyesight for several years by an accident, he went to no college, but was tutored in the science of telephony, accounting, commercial law. Now he golfs, motors, fishes, hunts. His summers are usually spent in a palatial home at Madeline Island, Lake Superior, where plies his yacht. In running his business he has one unusual method: when he finds a good man he immediately gives him a long-term contract, sometimes for as long as 25 years.

President of the new company will be Arthur Frank Adams, onetime lineman, now Associated’s chairman and generally regarded as a mainspring of its internal tional organization.

Chairman of General Telephone & Electric’s executive committee will be Elisha Walker, Chairman of Transamerica’s executive committee. Last week he expounded the reasons that make this deal logical, reasons realized by Ivar Kreuger when he bought into Ericcson Telephone, a similar deal. Said Mr. Walker somewhat verbosely: “It deserves to be noted that in an era distinguished not infrequently by industrial overproduction, there has been no excess of production by manufacturing plants producing the requirements of telephonic communications systems overseas. . . . We may anticipate, I believe, a continuing development in telephonic communications overseas.”

Almost simultaneous with announcement of the deal, Associated Telephone declared an extra dividend of $1, its second extra this year.