Practical Test

To Colorado's strike-bloodied coalfields in 1927 came trim, zealous Josephine Roche, Vassar-trained daughter of reactionary Financier John J. Roche, and heir to his minority holdings in the $10,000,000 Rocky Mountain Fuel Co. Behind her lay 17 years of hard social work. Ahead lay her big chance to "fight for tremendous things," i.e., to put her long-pent labor-relations theories to a practical test. Last week the test was close to an end.

Miss Roche started out bravely. She bought control of Rocky Mountain Fuel, then rammed through the first mine union contract in Colorado history. R.M.F., which has lost $648,570 to date, began to perk up--principally on business from unions and liberal Democrats.

The Open Door. But two factors worked against Josephine Roche from the start: 1) wobbly R.M.F.'s swollen bonded indebtedness of $3,971,000, floated in 1913; 2) cheap natural gas from Texas.

In 1930-31, other Colorado coal companies began a price war to break R.M.F. R.M.F. began to sink. But on one occasion, her employes went without full pay for two and a half months to lend $80,000 to the company.

In the lean years that followed, Miss Roche wheedled concessions out of other R.M.F. stockholders, staved off bankruptcy with loans from eastern friends (among them UNRRA Director Herbert H. Lehman). She went on paying the highest mine wages in the state, sent most of her salary ($12,000 at the peak) back into the business. Though most fellow Denverites thought her wealthy, she lived in a two-room walkup--except during 1934-37; when she was Assistant Secretary of the Treasury.

The Bottomless Hole. John L. Lewis' United Mine Workers felt a vested interest in keeping R.M.F. alive. Every year, Lewmurken Inc. (the corporation that handles U.M.W.'s investment funds) sank more money into R.M.F. until, by 1941, the corporation had assumed all of Miss Roche's debt of $800.000, had virtual control of the company through its 23% bond holdings.

Realizing that she could not meet her bonded debt. Miss Roche in 1939 asked bondholders to extend the maturity date ten years. Ninety-three percent agreed. Four years later, some of the others sued for principal and accrued interest. In 1944, beaten Josephine Roche filed a petition of bankruptcy.

Denver Financier Wilbur Newton, court-appointed trustee, found no traces of mismanagement--only a sick corporation kept alive by will and frequent financial transfusions. His recommendation: reorganize and wipe out the funded debt.

Last week, the Securities & Exchange Commission approved Newton's reorganization plan. It will be sent immediately to R.M.F.'s stockholders. The plan: establish a new corporation to liquidate the company, or borrow enough money (at least $350,000) to continue mining.

But even stouthearted Miss Roche could see little hope for anything but liquidation. Nor does the U.M.W. begrudge the money it will probably lose; it more than paid off in unionization of other Colorado mines. Last week a sympathetic Denverite summed up the results of Miss Roche's practical test: "[Miss Roche] has given 18 years of her life and virtually all of her personal fortune to keep afloat an enterprise that was doomed before she took it over. It was magnificent, but it was not business."

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