Boots

"What a nasty muddle!" exclaimed British businessmen last week. And the more they thought about it the more they fumed.

Maker of the muddle for clear-headed reasons was tall, scrawny-necked, gimlet-eyed Rt. Hon. Arthur Neville Chamberlain, Chancellor of the Exchequer. Muddled were Philip Ernest Hill, a most successful young British financier, and Boston's Louis Kroh Liggett.

Mr. Liggett is chairman of Drug, Inc., one of the biggest U. S. industrial concerns (1931 earnings: $19,000,000; assets: $175,000,000). Although Drug owns the Liggett drugstores, its chief source of income is from making and selling such products as Fletcher's Castoria, Life Savers, 3-In-One Oil, Danderine, Bayer's Aspirin, Vitalis, Vick's Vapo-Rub, Phillips' Milk of Magnesia, Ingram's Shaving Cream, Gastrogen Tablets, Sal Hepatica, Ipana, Cascarets and scores of other things to purge, beautify, bolster and assuage mortal beings. A lesser fount of Drug income is in its control (75%) of Boots Pure Drug Co., Ltd., the owner of the 900 famed Boots Cash Chemists shops which are scattered throughout England.

This investment, made a dozen years ago, cost Drug $10,000,000. Since then steady Boots dividends have gone to Drug. But Druggist Liggett, onetime patent medicine drummer, has never interfered much with Boots management, although he has encouraged it to sell picture frames, stationery, leather goods and other nonpharmaceutical lines. Boots management has remained an English management headed by John Campbell Boot, Baron Trent of Nottingham.

Last week Druggist Liggett was in London trying to sell Drug, Inc.'s holdings in Boots. For recent years have shown Drug that its real profits are from manufacturing of advertised products and that if babies cry for Fletcher's Castoria they will get it regardless of who owns the corner drugstore. And Drug could make good use of cash to buy in its own bonds at 65-c- on $1 and to tide over its money-losing Liggett chain of drugstores in the U. S.

Most interested in Boots was Mr. Hill, already chairman of its two big rivals (Timothy Whites and Taylors) and of Beecham Pills, Ltd. and Veno Drug Co., a manufacturing concern. He agreed to form a syndicate to buy the Boots stock for $25,000,000. London was agog with tales of a gigantic combine and happy over the prospects of having so big a concern come home to roost, laying its dividends on British soil. The U. S., of course, was pleased in the unique achievement of making a $15,000,000 profit out of a foreign investment. And then in stepped Neville Chamberlain, who intends to be Prime Minister some day.

Patriotic and Empire-minded as he is, Neville Chamberlain ruled that the $25,000,000 could not be transferred out of England because of its possible damage to the pound sterling. Bankers in The City were aware that no foreign issues can be floated in London but had no idea that the Bank of England's financial dictatorship extended to private deals of the Boots type. And since the Bank's tacit consent had already been given they fumed at this change of opinion. Said one angry editor: "Philip Hill might be expected to receive congratulations and possibly even mention in the next honors list for bringing a great British company back to British control. But instead the Treasury has selected its largest club to knock him on the head."

Drug Tycoon Liggett, usually famously convivial, was so shocked that his friends urged him to go away and rest. He talked vaguely of "legal rights" and "enforcement." But although no law supports Chancellor Chamberlain's ruling, not a bank in England would dare break it. While there was some talk of a solution in an arrangement for gradual transfer of the $25,000,000, control of Boots last week was still in the U. S. and Chancellor Chamberlain gave no indication of a new deal for what Britishers had hailed as "the deal of the Century."

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