Pivots & Guggenheim

Of all of the dramatic stock market events last fall, two have remained outstanding. One, perhaps the most spectacular, was John Davison Rockefeller's bid for 1,000,000 shares of Standard Oil of New Jersey. The other was the formation of the powerful Bankers' Consortium. Last week the Consortium issued its first official statement, making it through Morgan-partner George Whitney. Worded in ultra-conservative fashion, it was: "In behalf of the so-called banking group, consisting of ourselves, First National Bank, National City Bank, Guaranty Trust Co., Chase National Bank, Bankers Trust Co., Guggenheim Bros., which, on Oct. 24 last, was informally organized to assist in the stabilization of the then disturbed stock market situation, we are able to state that last week the group completed the liquidation upon the open market of the last of its share holdings."

In answer to further questions, Mr. Whitney declined to reveal how the Consortium had acted, admitted however that it came out "a little better than even."

Guggenheim Bros. Although many rumors flew wild during the "then disturbed stock market situation," announcement that the Guggenheims had participated in the Consortium came as a surprise to Wall Street. The chief Guggenheim companies, and the ones to whose aid they probably came, are American Smelting & Refining, and Kennecott Copper.

A potent house, closely affiliated with J. P. Morgan & Co., Guggenheim Bros. is in its second generation. No. i Guggenheim was Meyer, born in Switzerland in 1828, emigrating to the U. S. 19 years later. In Philadelphia, No. i Guggenheim vended various things, but first began making large profits through shoe-polish and glue. In 1872 he entered the embroidery business, taking into the firm his four eldest (of seven) sons: Daniel, Murry, Solomon, and Simon.

The Guggenheim entrance into mining was no haphazard stroke of luck. An associate of Meyer asked for a loan on a Colorado silver mine. Shrewdly, Meyer said he would rather be a partner. When the mine did not pay, he went west and supervised it. Soon the whole family was dabbling in many metals, and in 1901 their interests helped form the American Smelting & Refining Co., "The Smelter Trust."

Although the Guggenheim Brothers work as a unit with majority vote ruling, Daniel is the recognized patriarch and is given the most credit for their expansion. He spread their interests to Alaska, Mexico, South America. Asia and Africa. The firm organized the Chile Copper Co., producing copper 9.500 ft. above sea level. In Chile, Daniel developed a new process for nitrate manufacture, and the firm has large holdings in this industry. For service in Belgian Congo, including metal and diamond mining, Daniel was made a Commander of the Order of the Crown of Belgium in 1919.

In recent years, Daniel Guggenheim has devoted most of his time to wise philanthropy, including a $500,000 gift to Chile for aviation promotion. With his son, Harry Frank, U. S. Ambassador to Cuba, he has built up the famed Guggenheim Aviation Fund. However, while nominally retired, it is certain that Patriarch Daniel directed his firm's activities last fall.

Consortium. Only fragments concerning the Consortium have been made public, but much has been deduced, much learned from "high authority."

The "fund" is generally accepted as having been $250,000,000. The following is the unofficial description of the Consortium's story. Upon the first day (Oct. 24), it bought all stocks where no bids were present to meet large blocks for sale. Such a case was duPont, which after selling above $100, was suddenly faced with an offer of 20,000 shares at the market. These were bought by the Consortium at $80. The next sale was above $100 again. But after the first day, it became apparent to the Consortium that such a policy gave them a lot of stock in issues not important, and not underpriced. Also, they saw that it was impossible to halt the break. As a result, they decided to concentrate upon "pivotal" companies.

Judging from the date of its last meeting, the Consortium stopped buying on Nov. 13. As far as can be discerned, its last share of stock was sold by Feb. 19.

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