Morgan's Chicago Man

When the president of a large company is made the chairman of another large company, merger rumors often spring up. But last week when Sewell Lee Avery, longtime head of United States Gypsum Co., succeeded Silas Hardy Strawn as chairman of Montgomery Ward & Co. there was no chance for such talk. Instead, the announcement was taken as pure proof of Mr. A very's business acumen.

When Sewell Avery was made president of United States Gypsum in 1905 the company was four years old, he 31. He built it up steadily until earnings in 1925 and 1926 passed the $8,000,000 mark. A decline followed which carried profits down to $5,100,000 in 1929. For four years Gypsum engaged in a severe price-war with its big competitor Certain-Teed Products. Last year peace was declared, with Gypsum able to claim at least a moral victory. The result aided the company in making more money last year than in 1929 despite Depression, for 1930'$ earnings were $5,400,000. For the first half of this year the profit of $2,241,000 was less than in the same period of 1930 but still better than 1929's first half.

Although Gypsum has been Mr. Avery's chief interest, other directorates have learned to listen to the flow of anecdotes and discourses on education in which he often indulges at meetings before settling down to the business in hand. His colleagues know that he invariably gets down to business in the end, unhurried, efficient, wise. His other directorates have included Armour & Co., Chicago, Great Western, Chicago Daily News, Container Corp., Continental Illinois Bank & Trust (where he also sits with the executive committee), and a few months ago United States Steel Corp. was added to the list (TIME, July 27).

In Chicago tall, fine-looking Mr. Avery is now regarded as Morgan's Man, for Montgomery Ward is a "Morgan company." He lives in Evanston, has a town apartment, a yacht named Lenore (his wife's middle name). A University of Michigan man (LL. B. 1894) he is one of the University of Chicago's most helpful trustees. Its Distinguished Service chair was founded by him with $250,000 endowment. Seldom publicized, he is quietly recognized as one of Chicago's first citizens. His recognition by the House of Morgan after U. S. Gypsum's showing in its struggle with Certain-Teed was doubtless due to the fact that another potent competitor in the difficult building trade is Morganized Johns-Manville Co. When in 1921 Montgomery Ward faced grave difficulties because of inventory value shrinkage, the late Theodore Frelinghuysen Merseles was made president. Expansion followed and in 1927 President Merseles left to head Johns-Manville. He was in this position when he died in 1929. Succeeding him in Montgomery Ward was George Bain Everitt who had had 15 years of mail order experience. The company then began opening its chain stores. Inventories and assets shot upwards but the program'was predicated on further sales growth. Depression hit the company badly. Recent earnings have been:

1928 $17,700,000

1929 $13,400,000

1930 $423,000

This year the company has lost $2,692,000 in the first nine months. Although the company's management was strengthened last year it was thought to have counted heavily on a merger with Sears, Roebuck, to have decided to get a new executive shortly after that deal fell through.

On the day the directors met last week to elect Mr. Avery, first a member of the Board, then its chairman, he began work. It is believed he will take a very active part in the company's administration, will seek to squeeze profits out of the company's $270,000,000 yearly sales. He has ample ammunition to aid him, for the company's $168,000,000 in assets as last reported included $109,000,000 current assets against current liabilities of but $7,820,000. Cash and call loans stood at $28,000,000. Much of the company's strength comes from the offers of rights to stockholders in 1928 and 1929. About $100,000,000 was raised this way and the second offer, just before the Crash, was fortunate finance.

Silas Strawn (who never had an office at Montgomery Ward) will be chairman of the executive committee. Chief reason for his resignation as board chairman was thought to be the wide pressure of his other work. As a member of Winston, Strawn & Shaw, attorneys, he has such clients as Alton Railroad; Chicago, Great Western; Michigan Central; Union Stockyards. In addition he busies himself with the presidency of the United States Chamber of Commerce and in Chicago's civic affairs. Said he last week: "Mr. Avery is the best man in the United States for the job."

Although Chairman Avery will devote much time to Montgomery Ward he made it plain last week that he will be just as active in Gypsum as ever. This company turns out about 50 building material products, most of them with gypsum as a base --gypsum stucco and plasters, gypsum partition tiles, roofing and flooring, metal laths, wallboards (some sound-proofed), limes, glazes. Gypsum is a mineral, soft, colorless or white. Sometimes it is marble-like. This type is known as alabaster. It has been quarried in the Montmartre section of Paris. Gypsum, with 75% of the water drawn out, has long been termed Plaster of Paris. Large deposits exist in Canada, where are U. S. gypsum's biggest mines. One use of gypsum is as a filter for water, making it permanently hard to be used in brewing pale ale. It is made into molds for potters. Farmers buy it as a fertilizer.

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