Stop-Loss Order

Elastic Stop Nut Corp. of America, which paid more than $10 million in 1943 excess-profits taxes, is one of the nation's lustiest, most publicized war babies. In eye-stopping two-color ads, the company has dramatized its principal product, a patented, self-locking nut, has regularly claimed "more Elastic Stop Nuts on America's war equipment than all other lock nuts combined." But last week the company was struggling to put a stop lock on its troubles.

The company's youngish President William Hedlund, 45, had just committed suicide at his home in Summit, N.J. Associates said he was a "war casualty"; Engineer Hedlund had worked himself (15 hours a day) into a sick, despairing man, while he boosted company production by $17 million in a year. A few hours later SEC, acting under powers never before used, suspended trading for ten days in the company's bonds, preferred stock, and its New York Stock Exchange listed common.

But the SEC order was issued for reasons other than Hedlund's death. Several weeks ago the company began discussions with SEC on the deterioration of its position. At the same time, SEC began to watch with interest the behavior of the company's securities. The bonds had slipped from 100 to under 90, and the common dropped from a high of 15 1/4 to 11 3/8. Company officials approved the suspension as a sound move to protect security holders from losses generated by rumors, and held an all-day session in an effort to cut expenses and find a new president.

At week's end, the company filed with SEC the required updating of its January 1944 prospects. It showed what can happen to war babies when war orders drop. Because of cutbacks and previous overbuying by customers, demand for self-locking nuts fell sharply during the second half of 1944. The company that earned $1,084,381 in the first six months sustained a net loss during August, September and October of $200,000. But company officials believe a profit can still be shown on the full year.

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