Business & Finance: Out of Hiding

Two months ago, the Battle of Flanders sent the New York Stock Exchange into a tailspin, forced the Dow-Jones industrials average to its lowest point since 1938 (111.84). Result: many a U. S. corporation that had planned new financing ran for shelter instead. The capital market crouched for a long, scared wait.

By last week the stockmarket averages, still crouching, had crept back to 121.48, bolstered by the prospect of Defense spending. Out of hiding came both deferred and new capital issues: some $120,000,000 worth, the most since the week ending March 1, 16 times as much as the previous week. Public offerings included one railroad, one utility, three industrials. Starved investors gobbled them all up, along with a whopping new-money Treasury issue.

> Most interesting new issue to speculative pockets was 325,000 common shares of Philco Corp., No. 1 maker of radio sets, hitherto closely and privately owned. Philco’s spectacular career had whetted Wall Street appetites for years. Once a small maker of storage batteries, Philco dived boldly into the turbulent radio set business in 1928, went $7,000,000 into debt, emerged at the top of the manufacturing heap, ahead of RCA (on whose patents Philco depended). Hit by strikes in 1937 and 1938, it came back last year, for the year ended last March had a $2,359,767 net. Until last week Philco stock was owned by fewer than 100 people, most of them Philco directors, officers or employes.

To keep the profit motive working around his Philadelphia plant, Philco’s former president, James Mortimer Skinner, always insisted that the company buy back its stock when holders retired or died, then redistribute it as a bonus to younger men. For this purpose Philco paid life-insurance premiums on its big stockholders amounting to upwards of $100,000 a year. This was a steady drain on company cash. Meantime stockholders, however loyal, sometimes wanted cash, a market. Last week 26 of the largest put up 175,000 shares (20% of their holdings), Philco put up 150,000, the public was told to come and get it at $15 a share.

Twenty-eight years ago, President Skinner hired a clumsy, bespectacled high-school lad named James T. Buckley to work in the chemistry lab. He broke so much glassware that he was transferred to engineering. There he broke so many hard-rubber jars (for storage batteries) that Skinner yanked him out again. Only other possible spot was the drafting room—and young Buckley was nearsighted. But Buckley got his chance, soon rose to head draftsman, to purchasing agent, to treasurer. Last year, when Skinner retired, he became Philco’s president.

Other offerings last week:

> Indianapolis Power & Light Co., which last April became the first post-Depression electric utility to float new-money common stock (TIME, April 15), offered $32,000,000 in 3¼% bonds, proceeds of which will be used to redeem 3¾% bonds.

> Texas Corp. saw its $60,000,000 issue of 3% bonds, postponed since May, snatched up, to redeem an equal amount of 3½% debentures.

> 138-year-old Scovill Manufacturing Co., having postponed for weeks a $10,000,000 refunding and new capital debenture issue, saw it go to a two-point premium. Scovill made brass buttons for U. S. uniforms in the War of 1812 and for the Texas Navy in 1836. Now it makes scores of small metal products, from safety pins and tire valves to hair driers, vacuum cleaners; also hundreds of tons of penny and nickel blanks for the U. S. Mint. Scovill, practically commandeered by the U. S. Government in World War I, is again turning out cartridges and many another military gadget.

> The U. S. Treasury, to replenish its cash supply (which had slipped below $1,000,000,000), publicly offered $600,000,000 of 2¼% 14-to-16 year bonds. The issue was oversubscribed ten times. With large Defense borrowings pending, the Treasury was pleased to find that it could still raise all the money it wants in less than 24 hours.