Weber v. All Comers

Last week a stockholder rose in meeting as stockholders do in Depression. The stockholder was James Watson Gerard. Wartime Ambassador to Germany. The meeting was the annual meeting of Allied Chemical & Dye Corp. What Mr. Gerard wanted to know was the market value of $92,400,000 of "U. S. Government and other marketable securities" carried as assets by the company.

He got a brief answer: "About $28,000,000 less than book value."

He wanted to know what part of the company's $11,400,000 profits came from manufacturing, what part from stock-market operations. To such inquiries he got no answer save that there would be

"no change in the company's method of issuing statements." Thwarted, Mr. Gerard departed with probably as much information as he expected to get. For he had had to ask his questions of a vice president who presided, and it is well known that no one has the prerogative of speaking for Allied Chemical except Orlando Franklin Weber. Allied's president, chairman, master. Mr. Weber, successful head of Allied, vast chemical combination since it was formed in 1920, is a man who holds his cards tight against his vest, smiles saturninely, plays with no partners, keeps his opponents at a respectful distance. Heavy of form, mellifluous of voice, he goes his own way, and has his own way: attends prizefights unknown to the mob, vents his economic theories among his industrial peers, takes no one into his con- fidence, and has many men under his domination. In practice Allied Chemical is not an alliance but a monarchy and Orlando Franklin Weber is its monarch. Studiously polite, wholly unyielding, little did Mr. Weber care last week for Mr. Gerard's futile questions. Little did he seem to care for a more emphatic protest. In fact so studiously did he keep in the background that there was no evidence that he was even aware that the Stock List Committee made a most unusual report about his company to the Governing Committee of the New York Stock Exchange. The Stock List Committee made public the story of its attempts to get Allied Chemical to give its stock-holders more & better information. Last June the committee wrote to Mr. Weber urging that the company tell at least in a general way what its securities were, what they were worth, what its reserves were for, whether its curious "further surplus" was earned, what part of its income was from operations, what part nonrecurring, and urging the company to make quarterly statements. Most considerately the committee put its re- quests: ''Details . . . are, of course, fully open to discussion ... as a suggestion rather than a request. . . . We earnestly seek your cordial co-operation in the interests of your own stockholders. . . ." Mr. Weber delegated the secretary of Allied to reply and at the end of two months the secretary finally said that Allied saw no reason to change its ways. Then Frank Altschul, chairman of the Listing Committee (leading partner of the well-known private banking house of Lazard Freres with which Eugene Meyer, one of Allied Chemical's big stockholders, has old family connections), personally wrote Mr. Weber informing him that the Committee was going to put the whole question up to Allied's directors. Later Mr. Altschul was told that Allied's direc- tors had discussed the question and referred it to a special committee. Months passed and nothing was heard from the special committee--one of its members was "unavoidably" absent from town-- but the Stock List Committee hoped against hope until last March, when Allied Chemical issued its 1932 statement in the same form as before. Then Mr. Altschul, up in arms, wrote pressingly to Mr. Weber urging that if Allied's "marketable securities" were not worth at least $92,400,000 at the market, that figure had no business to appear as a current asset regardless of whether reserves were set up to take care of security depreciation. "Accordingly, it appears to this committee that the balance sheet in its present form is misleading . . . inadequate." Something over three weeks later Mr. Weber again delegated the secretary to reply: ". . . Regarding the proper accounting procedure . . . we would suggest that there may be some variety of proper procedure in this regard. For example, your views are evidently not shared by the Comptroller of the Currency . . . as indicated by recent published balance sheets of national and state banks. . . ."* Mr. Altschul figuratively threw up his hands, invited the Governing Committee of the Stock Exchange to act. The only disciplinary power of the Exchange would be to drop Allied's stock from trading privileges. Today the Stock Exchange is undertaking reforms as never before. It would be news indeed if a man of Mr. Weber's character backed down. Secure in the knowledge that he has made good profits for his stockholders in the past, he feels no obligation to take them much further into his confidence. Unless the Stock Exchange backed clown, Wall Street last week foresaw 1 ) that Allied stock-holders would be given some time to induce Mr. Weber to change his mind; 2) that if they did not succeed, the stock would be dropped from the Exchange. Whether stockholders could successfully bring pressure on Mr. Weber is a question: two of Allied's largest stockholders are supposed to be Eugene Meyer (who originally brought Mr. Weber into the chemical business) and Orlando Franklin Weber himself.

* Cynical reference to the fact that banks have been allowed to carry bonds at arbitrary figures.

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