Revolt in l.T.& T.

Hawk-nosed, hawk-fast Sosthenes Behn has run International Telephone & Telegraph Corp. pretty much as a one-man show. Undisputed boss of the world-straddling empire he helped found, he has remained so by moving faster than bosses of governments. In 1941, just a few days before the Nazis moved in, Behn sold l.T. & T's telephone-operating subsidiary in Rumania to the government at a handsome profit. He sold out in Argentina last year for $95 million (TIME, Sept. 16, 1946), and he got $88 million in cash and bonds for l.T. & T. properties in Spain.

Last week, it looked as if wily old (65) Colonel Behn might have to relax his tight grip. At the best, he would probably have to share control of l.T. & T. with a rambunctious new group of his stockholders. At the worst, he might lose control completely of his $397 million domain.

Bill of Particulars. The stockholder group was formed by plump, pink-faced Clendenin J. Ryan, 42, well-heeled grandson of the late great financier, Thomas Fortune Ryan. Allied with Ryan were Allan Kirby, financial angel of Railroader Robert R. Young, and Robert McKinney, a cousin of Bob Young and a veteran of his proxy battles. Ryan, a heavy investor in l.T. & T. (he now owns over 100,000 shares), was aroused when he failed to get a representative on l.T. & T.'s board. He declared war.

In his first salvo, he charged that "in the past nine years Behn and his board of directors . . . have received more than $3,700,000 in salaries and fees while the . . . stockholders . . . have received nothing." l.T. & T. had not paid a dividend in 14 years, he pointed out, even though it showed profits in eleven of those years. Last year, when almost everyone else was making money, l.T. & T. lost $10 million. How, demanded Ryan, could the management explain away such a record?

Bills of Production. Under the attack, publicity-shy Sosthenes Behn broke a tradition of more than 20 years. He called a press conference to explain matters. The lack of dividends, said he, was caused by the company's hoarding of cash against possible loss on its foreign assets. He pointed out that l.T. & T. had paid off $120 million in debts in the last 15 years. Last year's loss was entirely the result of production problems in Federal Telephone & Radio Corp., a U.S. manufacturing subsidiary.

Company officials candidly said that l.T. & T. had made mistakes in running Federal. Its experience had been largely in communications (All America Cables & Radio, Inc., Mackay Radio & Telegraph Co., etc.). But l.T. & T. was getting production know-how and expanding its U.S. enterprises (principally Federal Telephone & Radio) to make up for its liquidated or blocked overseas investments.

The answers did not satisfy Ryan. He got permission from the Securities and Exchange Commission to take the first move in a proxy fight in which he hoped to oust Sosthenes Behn. Ryan estimated that he, his family and his friends already had behind them over 1,000,000 shares of the 6,399,002 shares of l.T. & T. stock. Behn, who always has a weather eye out for squalls ahead, suddenly changed his tack. Last week he offered to talk things over with the Ryan group face to face.

Ryan sat down with Behn and presented his terms for peace. He wanted to name 16 members of the 23-man board of directors, and thus in effect take control of the company. Behn offered him seven. The dickering continued. If Ryan didn't get what he wanted, he planned to take the first steps to get proxies for the showdown at the annual spring meeting.

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