Allied Off

If the New York Stock Exchange went in for fancy guild crests, its motto, most U. S. citizens have been led to believe, would be Laissez Faire. Until 1930, when stockbroking as a whole fell into public disrepute, the Exchange was content to make sure that its members were personally straight. Since that time it has given a good deal of thought and some lip service to Reform. President Richard Whitney from time to time made footling pleas that all companies listed on the Big Board issue in the interest of their shareholders honest, complete and accurate statements. Many an offending concern indifferently shrugged its shoulders, the plain implication being that Mr. Whitney would do well to mind his own business. Last week such reactions underwent a violent change. For Mr. Whitney, upon recommendation of the List Committee, had ordered that the common and preferred stock of Allied Chemical & Dye Corp. be stricken from the trading list as of August 23. This meant that Mr. Whitney's fellow-stock-brokers could no longer make money in the sales of Allied's millions of shares of preferred and common.

President, chairman and absolute monarch of Allied Chemical is Orlando Franklin Weber. For the most part, his industrial family has been content with Mr. Weber's monarchy for the good and sufficient reason that Allied Chemical has made money. During the past three years, however, certain investment trusts and other large Allied stockholders have been trying to find out the nature of the company's securities portfolio, what part of its profits ($11,400,000 last year) came from manufacturing and what part from stockmarket operations. Urbane but distant, President Weber wrapped himself a little tighter in his traditional cloak of mystery, refused to supply the information.

Last month Stockholder James Watson Gerard, Wartime Ambassador to Germany, parted the secret folds sufficiently to learn that the company's listed assets of "$92,000,000 in Government and other marketable securities" had declined $28,000,000 in book value (TIME, May 8). At the same time, Frank Altschul, chairman of the Stock Exchange List Committee, made public a year-long file of correspondence between his body and Allied Chemical. Mr. Altschul, Lazard Freres partner and brother-in-law to New York's Governor Lehman, had politely and persistently asked for a complete statement of the company's financial setup. Just as persistently and politely the company--that is, Mr. Weber--had refused. The only benefit from such a move, suave Mr. Weber insisted, would fall to his competitors at home and abroad.

Mr. Weber can be as persuasive as mysterious. Last week he appeared at a hearing on his case behind closed doors in the Exchange Building. Few of his inquisitors, who last year profitably traded 14,000,000 shares of his stock, were prepared to invoke the drastic and unprecedented penalty of banishment on Allied Chemical as the meeting drew to a close. At that point a junior member whispered in Chairman Altschul's ear. He wanted Mr. Weber asked one question.

Mr. Altschul hesitated. The question was too ridiculous, too absurd. Particularly since everyone on Wall Street knew Mr. Weber's almost monomaniac views on accurate bookkeeping. Nevertheless he diffidently inquired: Did Allied Chemical, perhaps, carry a little of its own stock (i. e., its liability) on its books as assets? Yes, said urbane Mr. Weber. It was, of course, surmised Mr. Altschul, a small amount of the company's $92,000,000 portfolio? Not at all, blandly admitted Mr. Weber, it was the company's largest single holding. That statement was enough to turn a banker's hair snowy white.

The day following this appalling revelation, President Whitney announced that Allied Chemical would be stricken from the list "unless . . . the corporation shall have furnished stockholders with adequate information in regard to the present condition of the company," including the income account which in the opinion of the committee "amounts to nothing more than a statement of an arbitrary amount which the management and directors . . . have elected to call 'income.' " Allied Chemical set about looking for another exchange on which to trade its lucrative but secretive shares.

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