Corporations

Last week the following newsworthy corporations made the following news:

Red Brown. Extending nearly three miles along the banks of the Androscoggin River in Berlin, N. H. are the mills of Brown Co., a $74,000,000 family-owned paper & pulp concern that was founded as a lumber company in 1852. It has smaller mills in Quebec, general offices in Portland. Me. and timber lands owned outright that are larger in area than the State of Connecticut. The original company was purchased during the Civil War by a Portland lumber merchant named William Wentworth Brown, who branched into paper & pulp in the 1890's. His four sons inherited the business and today are its only officers and directors. And his grandsons hold such key jobs as sales-manager, purchasing agent, head of manufacturing, manager of Canadian plants. President Herbert Jenkins Brown, like most of the Browns, lives modestly in Portland. His brother William Robinson was once a breeder of Arab horses. All Browns have gone to Williams since President Herbert graduated in the Class of 1885.

A canny, close-knit, tight-lipped clan are the Browns but Depression in the paper & pulp industry was too much for even them. Though they carefully kept all common stock within the family, both preferred stock and bonds were sold to the public. Preferred dividends were stopped in 1931 but despite a series of deficits footing up to more than $14,000,000 in four years, bond interest was paid promptly. Last week, however, with "deepest regret," the Browns announced that they would have to default their obligations. They admitted that business was better in the first half of this year but declared that renewed price-cutting following the death of the Blue Eagle plus wage boosts, plus increased freight rates, plus rising raw material costs, had again pushed their operation into the red. Furthermore, a financial reorganization under the Bankruptcy Act now seemed imperative.

Brown Co. was a pioneer in the newsprint field but abandoned it in favor of kraft papers just before the War. Coarse, heavy paper still accounts for nearly one-third'of Brown's business but its trade fame now rests on pulps. In 1924 its research chemist developed a highly-purified cellulose fibre used in the manufacture of yarns, fabrics, absorbents, fine papers and innumerable plastic products ranging from lighting fixtures to poker chips. The company itself manufactures finished products like yarns, conduits, shoe linings. A leader in forestry and reforestation, Brown Co. abandoned the last of its original lumber business in 1930.

Columbia. Columbia was the only major film company to show steady Depression profits. Last fiscal year it earned a whopping $9.91 per share on its common stock. Having considered these facts, the Brothers Cohn, President Harry and Vice President Jack, last week announced plans to issue 75,000 shares of no-par preferred stock paying $2.75. Part of the three or four million dollars thus raised will be used to retire a small outstanding issue of $3 preferred, the rest added to working capital. Next week, also, the Cohns will ask stockholders to approve a 50% stock dividend on the common stock.

Half the story of Columbia's rise can be found in recent hits like Lady for a Day, It Happened One Night, One Night of Love, Broadway Bill, Love Me Forever. Out of the 16 annual awards of the Academy of Motion Picture Arts & Sciences, It Happened One Night, "1934's best picture," took five, and One Night of Love picked up two more.

The other half of the story is what Columbia did not do during the boom. It did not keep expensive stars under long-term contracts. It did not load itself with theatre chains. It did not get itself heavily in debt. Such unusual wisdom in Hollywood was due chiefly to the frugal instincts of the Cohns. Brother Jack's early experiences filming Westerns in a woodsy spot on upper Manhattan Island convinced them that a cheap picture can be made to yield as high a boxoffice return as an expensive one. In 1920 they began their career on Hollywood's "Poverty Row'' with a series of shorts called The Hallroom Boys. Still pinching pennies, they followed that with Screen Snapshots, a particularly offensive scrapreel dealing with the home life of cinemactors. By 1922 they were turning out feature pictures.

Trim, energetic President Harry Cohn, who runs the production end of the business, knows his studio as do few producers. Driving to work in the afternoon in one of his three Rolls-Royces, he stays at his desk until 2 or 3 next morning. A desk-pounding, finger-snapping executive, he has nevertheless learned the wisdom of giving a good director like Frank Capra his head.

Last week the Brothers Cohn were pleased to learn that the Italian Fascist Party had awarded its prize for the most artistic foreign film to Columbia's No Greater Glory (see p. 63).

Cliff Buyers. Cleveland-Cliffs Iron Co. owns a railroad, lumber tracts, coal mines, chemical works, charcoal plants. It has a large fleet of Great Lakes freighters. Normally it is also a producer of pig iron. But first & foremost Cleveland-Cliffs is a miner of iron ores. Its ore reserves in Minnesota rank second only to those of U. S. Steel Corp. And for that if no other reason Cleveland-Cliffs is a highly desirable property in any steelman's eyes. Whenever steel mergers are rumored, its name is sure to pop up.

Last week the name of Cleveland-Cliffs popped up not in connection with a merger report but in a deal in which the principals were certainly not unaware of its merger possibilities. Very quietly a group of Eastern bankers and investment trusts bought, a large block of stock in Cliffs Corp., the holding company superimposed on the iron company. The sellers were supposed to have been Cleveland's rich & pious Mathers, who have dominated the company since it was founded in 1850 by a direct descendant of Puritan Richard Mather.* Only one of the six buyers was identified: Adams Express, which is not an express company at all but an investment trust. Simultaneously it was learned that Cleveland-Cliffs was dickering with Hayden. Stone & Co. for some financing by which it might pay off a staggering total of bank loans--$25,000,000 borrowed to purchase indirect control of Corrigan, McKinney Steel before Depression. Under the terms of the pending merger of Corrigan, McKinney with Republic Steel, Cleveland-Cliffs will bv a devious corporate route receive large blocks of Republic stock, of which it already holds more than 100,000 shares.

* Richard's son, Increase Mather, was Harvard's sixth president. Increase sired Cotton Mather, prodigious Puritan scribe (450 books).

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