CORPORATIONS: Mouse Among the Elephants

When Physicist Richard S. Morse founded his National Research Corp. in Cambridge, Mass. 15 years ago, he started out with two basic ideas. On the scientific side he wanted to develop new products and processes and then get help from bigger companies to put them into production. On the financial side he believed that investors were more interested in growth industries and capital gains than a quick cash return; instead of paying dividends, his company would plow back its earnings into new projects that would pay off investors in capital gains as they grew. Both ideas have been so successful that Nation al Research has blossomed from a $50,000 investment into a $4,500,000 research company, with 150 patent applications and profitable tie-in agreements with seven big companies using its discoveries. Last week National Research helped to launch two more big companies in new fields. The two:

¶ The United Gas Corp., world’s biggest integrated gas system, which will go into the petrochemical field. United Gas and its former parent company, Electric Bond & Share Co., will build a $23 million gas cracking plant near Pensacola, Fla. and National Research will buy a 10% interest in it. At first, United’s plant will make only anhydrous ammonia, the new chemical fertilizer that increases crop yields up to 300%. But a 40-man task force of National scientists has been at work for four years developing several new cracking processes that will eventually put United’s Florida plant to work making other petrochemicals from natural gas.

¶ The $362 million Monsanto Chemical Co., which, with National Research as a partner, will go into the titanium business. The two companies expect shortly to sign a contract with the Government to build a $1,750,000 pilot plant to test National Research’s revolutionary method of refining titanium. The method will be the first practical non-Kroll* process: by bypassing the rough, sponge stage now necessary in titanium refining, National Research expects to turn out highly purified metal crystals that can then be melted down into solid metal. If the idea pans out it should cut the cost of titanium (now $5 a lb.) enough so that it will find a vast number of new uses.

The Airless Wonder. As a mouse teamed up with industry’s elephants, National Research has done well because President Morse, 43, is a rare combination of scientist and businessman. An M.I.T. graduate (’33) who worked for Eastman Kodak until he decided that he could do better on his own, Morse started out with the basic idea that high-vacuum (i.e., removing all the air) techniques could be useful to U.S. business. He and his staff developed machines efficient enough to suck all but a cupful of air out of an area as big as Chicago’s Union Station. Then he worked out ways to use vacuum processes to dehydrate foods without killing vitamins or taste, refine metals better by keeping out impurities formed by the metals’ contact with air, powder drugs faster than before, and coat delicate optical lenses with chemicals to improve light transmission up to 200%.

Morse’s first big financial success was frozen orange juice, which he discovered how to make with his high-vacuum process. He helped set up what is now the Minute Maid Corp. in 1945, and after some early marketing troubles, started the frozen-orange-juice boom. Minute Maid grew into the No. 1. U.S. frozen-orange-juice company, with 30% of the market and 1953 sales of $36.4 million. Morse sold National Research’s interest in Minute Maid, but he still retains a royalty agreement that will eventually net National Research more than $5,000,000 on its total research cost of $150,000.

With Minute Maid booming, Morse lost no time exploring other fields. National Research went into instant coffee (Holiday Brands, Inc..) and antibiotic drugs, now produces 90% of the drying equipment used by U.S. penicillin makers. For the electronics industry National Research developed high-vacuum machines for TV and radar-tube production.

Into the Crucible. But the most promising field of all is heavy metallurgy, where high vacuum can be used to cast and refine everything from steel to super-pure alloys for jet engines. National Research, which set up Vacuum Metals Corp. to do the basic refining job itself, recently sold a 50% interest to Crucible Steel Co. for 25,000 shares of Crucible stock and $500,000 worth of equipment.

With all its success, Physicist Morse’s National Research Corp. has still to pay its first cash dividend to its 1,133 stockholders. Though profits this year should jump past the $800,000 mark with revenues of nearly $5,000,000, the company will plow 50% of its income back into research, use the rest for other projects. Morse’s stockholders are not likely to complain. Since 1940, National Research’s original 1,000 shares have been split 150 times. The stock now sells at $23.50 a share, making an original $1 investment worth $3,525 on the open market.

*Named after Dr. Wilhelm Kroll, who discovered the present method of refining titanium while working for the U.S. Bureau of Mines (TIME, Aug. 11, 1952).