Business: Downtown

¶ Into court last week marched elderly President Edward J. Jamison of Globe & Rutgers Fire Insurance Co. and demanded back the big company which the New York State Superintendent of Insurance took away from him last March. At that time securities which cost the company $73,800,000 were worth $19,900,000. Since then, said President Jamison last week, the stockmarket had been good to him. Globe & Rutgers’ assets now exceeded liabilities by $10,000,000. The court pondered his plea. Wall Street wondered if Globe & Rutgers’ rise did not bear out one of its pet theories on the New Deal market: ”Buy the worst stocks and make the most money.” ¶ In Ohio last week eager purchasers were rushing out to the threshing floors, offering farmers $1 and $1.01 a bushel for wheat—the first time they have been offered $1 in three years. Threshing machine men upped their rental charges 25%. In the Chicago pit, wheat for May delivery touched $1.27¼ a bushel. But wheat was not the sensation of the pit. Rye outdid it. Rye (unfavored by Government restriction measures) touched $1.08½ for December delivery—jumped 23¢ a bushel in a week. Talk of a corner in rye by Dr. Edward A. Crawford (TIME, June 19) was resumed. Also there was talk of a rye shortage due to 1) expected use of more rye flour in bread as wheat prices rise; 2) expected large demand for rye by distillers. In one day 7,000,000 bu. of rye were sold. (Total U. S. rye crop is normally about 40,000,000 bushels.) Report was that, attracted by high prices, 600,000 bu. of Canadian rye had been bought for import (in spite of the duty of 40¢ a bu.), that buyers were eagerly negotiating for more rye in Argentina as well as Canada. ¶ For over a year Orlando Weber, president of Allied Chemical & Dye Corp., held the New York Stock Exchange at bay. The Exchange wanted him to give more information to his stockholders (TIME, May 8) and he refused. The Exchange threatened to strike Allied’s stock off the board. A group of Allied’s stockholders began a revolt to elect new directors. Last week Mr. Weber gave out the terms on which he capitulated to the Exchange’s demand for fuller corporate reports: 1) to show the cost and market value of the company’s securities; 2) to segregate U. S. Governments from other securities; 3) to specify the nature of Allied’s surpluses; 4) not to change depreciation policy without so stating and to give annually the gross amounts of retirements from plant account; 5) to show all income as credits to income account before any transfers to surplus or reserve; 6) to segregate non-operating and non-recurring income from operating income; 7) to show the number of shares of the company’s own stock held in its treasury; 8) to credit no dividends on such stock to income account. In pursuit of this new policy Mr. Weber informed his shareholders of Allied’s holdings of its own stock on July 8:

Shares Cost Market

Common . . . .187,189 $25,837,300 $24,334,570

Preferred . . . . 47,309 5,640,485 5,700,735

¶While President Roosevelt and most U. S. oilmen were breasting the flood of

U. S. oil in Washington last week, Saudi Arabia’s tall, frowning King Ibn Saud squiggled his name to a royal decree granting Standard Oil Co. of California exclusive rights to all oil found in the eastern part of his arid kingdom. Observers nodded. The mightiest man in the Middle East was furthering one of his prime policies: to make friends not with European powers which dominate King Ibn Saud’s neighbors, Palestine, Iraq and Egypt, but only with nations comfortably distant. Standard of California already holds a concession on Bahrein Island in the Persian Gulf, where oil now flows. On the mainland no wells have yet been sunk. Only other important U. S. concession in the oil-cellared Middle East is a 23¼% interest, held by Andrew William Mellon’s Gulf Oil and a group of Standard companies, in the fabulous Iraq fields. ¶ For two years stockholders in American Tobacco Co. (Lucky Strike) have been raising hob in the courts because President George Washington Hill and his vice presidents have long voted themselves some of the fattest annual bonuses in the U. S. (TIME, April 17). What irked stockholders even more was the fact that the directors, Mr. Hill and his fellow officers, had allotted themselves big blocks of American Tobacco stock at a price far below the market. Last week stockholders dropped their suits when the management agreed: 1) to withdraw claims to $1.842,000 of stock in American Tobacco’s treasury, 2) to slash the bonus fund of Mr. Hill & friends.

¶ Joseph P. Day, most famed U. S. real estate auctioneer, last week sold one of biggest errors of judgment, Manhattan’s 53-story Lincoln Building. Financial wiseacres of Depression exaggerated when they said that any one who received the building as a gift would go bankrupt. In 1932 Lincoln Building earned $514,000 after taxes, but $514,000 would not pay $1,325,000 in fixed charges. The auction was brief. One bidder was Charles F. Batchelder, vice president of Chase Harris Forbes (bidding for a bondholders’ committee representing $15,000,000 of the first mortgage bonds). The other bidder was Robert E. Dowling, head of City Investing Co.

Text of the bidding, exclusive of Joe Day’s enthusiastic interpolations:

Mr. Batchelder: $3,200,000.

Mr. Dowling: $4,000,000.

Mr. Batchelder: $4,250,000.

Mr. Dowling: $4,500,000.

Mr. Batchelder: $4,750,000.

Thus a $27,000,000 error went for 17½¢ on the dollar; only first mortgage-bondholders have any equity left.