Cousins Marry

Last week big, hearty, 51-year-old ex-Steelman Harry Woodhead, chairman of Vultee Aircraft (military planes), announced that his company would buy Stinson Aircraft Corp. (private planes). The price: 302,168 shares of Vultee, or about $2,265,000 at the market price of Vultee stock.

Vultee began in Downey, Calif, in 1932, exported to China, Brazil and Turkey, became famous for its V11 fast attack bomber in 1935. The still faster V12 was eagerly bought by Russia (for the design) and China (for fighting Japs).

This year, in the Vanguard interceptor pursuit, Vultee produced one of the fastest planes in the sky. Since March, World War II has tripled Vultee's backlog of unfilled orders to an estimated $40,000,000 (all military, some foreign).

Stinson Aircraft is older, less spectacular. Since 1926 it has made more four, five and six place commercial planes than all other producers combined. Essentially a private-plane maker--although England recently bought more than 600, reportedly for Army courier service, and the U. S. Army has bought some for short-range observation work--Stinson's backlog has also tripled since March to a record $9,000,000.

This, together with Stinson's recently completed $2,000,000 Nashville plant, made the price paid by Vultee appear cheap.

With his backlog threatening to choke the fast-growing company, tall, straight-lipped Vultee President Richard W. Millar needed new capacity fast. Stinson has the advantage of a supermodern plant, situated in the Defense Area, hemmed in by the high Cumberland Mountains, supplied with cheap TVA power. It adjoins Nashville's huge new Berry Field, with ample runway room for test takeoffs. The average flying weather is better in Tennessee than most other sections. With Tennessee's plentiful labor, Vultee could figure on boosting employment at Nashville from Stinson's present 725 to 7,000 or more. Stinson had a parts plant at Wayne, Mich.; Vultee could use that. Finally, by immediately expanding Stinson's 180,000 square feet to 900,000 or more, Vultee would be one of the first major companies to develop a new "inland" defense plant, long wanted by the Army. That could be a political advantage.

Actually Vultee and Stinson were already cousins, controlled by the same man--round-faced, 42-year-old Victor Emanuel, one of the nimblest quarterbacks on the financial football field. Both were units -- Vultee 60% owned, Stinson 100% -- in his tangled Aviation Corp. holding company system -- Aviation & Transportation Corp., Aviation Manufacturing Corp., etc. (TIME, Feb. 19). News men, noting the low price Vultee paid, therefore looked for deeper meanings in the Vultee-Stinson deal.

In June 1939 ex-Sportsman Emanuel was flying to Nashville to visit his good friend Silliman Evans, publisher of the Nashville Tennessean. An hour late, his excuse was that he had spent the time searching for Fort Knox, hiding place of U. S. gold. Said Evans: "If the Govern ment has done so well in hiding its gold reserves, wouldn't it be a good idea to have airplane factories here?" Within a year Stinson had finished its new $2,000,000 Nashville plant.

For years Financier Emanuel has talked about a rationalization of his scrambled A. V. C. O.-A. T. C. O. system. It would please the Civil Aeronautics Board. The Vultee-Stinson merger looked like a step in that direction. But the aircraft industry thinks there was little if any A. V. C. O., A. T. C. O. or A. M. C. O. pressure, called it a manufacturer's deal. Victor Emanuel tacitly bore them out. When the merger was announced he was in Washington arguing before SEC over something else--the snarled Standard Gas & Electric utility system, also Emanuel-controlled.

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