Business: Reo Revitalized

Just before Reo Motor Car Co.’s annual meeting three years ago an Independent Stockholders’ Committee started a proxy battle to oust the management because of mounting deficits. The attack fizzled when Reo’s onetime President Richard Hugh Scott decided that he wanted no feud with old Chairman Ransom Eli Olds. In 1935, increased success with Speed Wagons and heavy duty trucks enabled Reo to finish the year with a deficit of only $220,000, a reduction of $738,000 from 1934. But last year the deficit swelled to $1,399,000. This included $605,000 for extraordinary expenses occasioned by discontinuance of Reo’s passenger automobile line (TIME, Sept. 14). Meantime, white-crested Mr. Olds, now 72, retired, keeping only 500 shares of his Reo stock.

Fortnight ago a new Manhattan group including Frank Arthur Vanderlip Jr., 30, son of the onetime president of Manhattan’s big National City Bank, sent a letter to stockholders soliciting proxies to use at the annual Reo meeting this week for the purpose of “revitalizing” the board. Wrote young Mr. Vanderlip: “[We have made] an exhaustive and careful investigation of a new plan for automobile and truck production and sales. … We propose to have the company go ahead with this plan.” Automotive Daily News said that the plan provided for production of 40,000 vehicles per year,* which obviously meant a return to the passenger car field, but Mr. Vanderlip said later he was not so sure of this. Also denied was any tie-up with Auburn Automobile Co., in which his father has substantial interests through Cord Corp.

Recalling the activities of the 1934 stockholders’ committee last week, Reo’s President Donald E. Bates answered back: “That group three years ago was definitely discredited. Today ‘the Independent Stockholders’ Committee’ reappears in the press—renewing its attack. . . . Recently Mr. Vanderlip notified the Reo management that he and his associates held substantial blocks of Reo stock and requested representation on the board. . . . That evidence has not yet been furnished.” Next day however, the story was different after President Bates met with the Vanderlip group in Detroit. Satisfied that Mr. Vanderlip & friends were not bluffing, President Bates was willing to have four new members added to the board. Selected on the spot were Mr. Vanderlip Jr. and Manhattan Lawyer Herbert Wilson Smith, onetime President of Standard Gas Co. of Ohio. To be added at the stockholders’ meeting in Lansing this week are William P. Loeb, Theodore Roosevelt’s longtime secretary, and Charles Goodwin Sinclair, engineer of American Telephone & Telegraph Co.

Since that was what Mr. Vanderlip wanted, the proxy fight ended there & then. A Harvard graduate (class of 1930), lively young Frank Vanderlip maintains offices at No. 52 Wall Street with his father, now 72. United in financial affairs, Vanderlip Jr. and Sr. parted on the subject of Prohibition. WThen old Frank became chairman of the national advisory board of the Crusaders (Wets) in 1933, young Frank joined the Citizens’ Legion (Drys) within 24 hours. No family row developed, however, and young Frank never signed an abstinence pledge.

*Reo last year sold 3,206 passenger automobiles, 11,422 trucks.