"Economy Harry"

Fifteen years ago a bond salesman was a cocksure college athlete who sold securities on his name, his nerve, his funny stories. Today he seldom jokes, needs tact and a knowledge of bonds rather than nerve. Fortnight ago, the U. S. bond salesman of 1940 had a chance to prove his skill. The job: to sell $108,000,000 of Southern California Edison 3% bonds at 104 to yield 2.78%--a lower yield even than most top-flight municipal bonds.

S. C. E. is a compact electric system serving 1,580,000 people in & around Long Beach, Calif. It has an unbroken dividend record, has covered interest charges an average of 2.79 times in the last ten years.

Its president, grey-haired, publicity-shy Harry John Bauer, 57, looks like Will Rogers (was once mistaken for him on a train). He believes lower rates mean bigger revenues, has cut his residential rate 2-c- to 3.76-c- per kilowatt-hour (national average 3.91-c-) in the last five years, boosted revenues over 20% in the process.

Harry Bauer also believes in paying low rates himself, particularly interest rates.

He is called "Economy Harry," is known from Wall Street to Hollywood as a tough trader. In 1935, to sell $108,000,000 in bonds, he arrived in Wall Street with a rifle under his arm, was joshed by friends: "Harry's loaded for wolves." The rifle was actually taken along for repair, but Sportsman Bauer sold the bonds for a then record 3 3/4%-- the first bonds to breach the 4% interest level for utilities.

Few weeks ago (barehanded this time) he went to Wall Street again, resolved to save $810,000 a year by refunding the 3 3/4s with 38. His trip was a cost-cutting spree. Hiring one of the largest U. S. investment bankers, hard-working First Boston Corp., he pared the usual two or more point commission to if points, a spread nearly as small as that secured by investor-popular American Telephone & Telegraph securities. He kept his own legal fees at rock bottom, watched those of his underwriters. To cut printing bills, he ordered only 47,500 copies of the 70-page prospectus, an almost skimpy number for selling 108,000 $1,000 bonds. It is rumored he even asked staid, profit-conscious American Bank Note Co. to run off his bonds at cut prices.

Biggest single utility issue since 1937, "Economy Harry's" 35 were a tough assignment for underwriters. No sooner had they taken it than it got tougher: the "Big Five" insurance companies (Metropolitan, Prudential, New York Life, Equitable, Mutual Life), who had wanted a 3% yield, boycotted the issue. Hence, instead of selling one-third or half the issue with five phone calls, underwriters had to sell to hundreds of small insurance companies, thousands of banks and private investors.

So they formed the largest selling syndicate in Wall Street history: 142 underwriters (who put up the money), 506 dealers (who took the bonds in lots as small as one each). Last week, after spending two days in Manhattan's swank Plaza hotel oiling and firing the starting gun, Utilityman Bauer was on the way back to his unpretentious home in Pasadena (via New Orleans because over-mountain trips sicken his wife). He was happy. Well over 90% of his bonds are sold; underwriters expect to have empty shelves by week's end. Better still, he had once more outmaneuvered the "Big Five," set a new low level for high-grade utility bonds.

This file is automatically generated by a robot program, so reader's discretion is required.