Bankers' Banyan

To Wilmington, Del., one day last week, went a handful of the 10,000-odd stockholders of Aviation and Transportation Corp. Gathered in its boardroom in the Corporation Guarantee & Trust Co., they helped elect three new directors (one of them bristle-maned ex-Champ Gene Tunney), asked a few questions, went their ways. Question none of them thought to ask was one that has been kicked around in the flying business like a sandlot soccer ball : what is ATCO going to do about simplifying its corporate structure?

For holding-company complications, the aviation business was getting almost as bad as the public utilities until the Air Mail Purge hit the industry in 1934. By the time that was over big holding companies like North American and United Aircraft & Transport had been forced to unscramble; their airline and manufacturing subsidiaries were summarily divorced. And one big aim of the CAA Act was to see that they stayed apart. Over inter locking directorates and stock controls CAA wields a dictator's power.

One holding company that remained a holding company was ATCO. At that time it was called Cord Corp. and its head, hardboiled, dynamic Errett Lobban Cord, was fast becoming the least regimented syndicateer in the flying game. But in 1937 Motorman Cord sold out his Cord Corp. holdings. About a quarter of them went to his broad-shouldered, boom-voiced No. 1 man, Lucius Bass Manning, already a large stockholder. The rest went to a syndicate headed by British Bankers J. Henry Schroder & Co., and to young, up-&-coming Public Utilitarian Victor Emanuel's investment house, Emanuel & Co. (in which he is now only a "limited partner").

Today, having got rid of some of its financial oddments like Checker Cab, ATCO owns majority control of New York Shipbuilding Co., the largest single interest (28.5%) in sick Auburn Automobile Co. It also spreads through the flying business like the branches of a banyan tree. This is because of its working (29.7%) control of Aviation Corp., which in turn owns outright a third-layer subsidiary, Aviation Manufacturing Co. AMCO owns Stinson (military and commercial planes), Lycoming (engines) and 60% stock control of Vultee (military planes). Furthermore, its parent Aviation Corp. owns potential working control of American Airlines, through $2,422,113 par value of American Airlines debentures which are convertible (at $12.50 a share) into common stock. If these debentures were converted (market price of American Airlines common: $48) Aviation Corp. would have not only a $6,878,800 book profit, but over 35% of American's voting stock.

Aviation Corp. also holds 135,194 shares (9-57%) of globe-girdling Pan American Airways. And one of ATCO's chief stockholders--Manhattan Bankers Lehman Bros.--has a partner, Robert Lehman, on Pan Am's board. What makes this interesting to flying men is that Lehman Bros, owns the largest single interest (38.7%) in American Export (steamship) Lines, which controls American Export Airlines. And American Export Airlines is currently after a CAA authorization to compete with Pan Am on the Atlantic run.

At the complex controls of this dynamite-loaded machine is round-faced, 42-year-old Victor Emanuel. president of both ATCO and Aviation Corp. at around $50,000 a year. A flier in the U. S. Naval Air Service until 1918, Cornell-man Emanuel took over his father's utility business, made it into National Electric Power Co. in 1923, spread it farther & wider through the Middle West, sold out to Insull in 1926. In 1929 he returned to the power business by buying into the Byllesby system's Standard Power & Light. An associate in this foray was famed International Banker Albert Loewenstein, who (Emanuel intimated before the TNEC last month) was readying a plan to grab control of a large cut of the U. S. public utility industry when he dropped out of a transport plane into the English Channel.

Victor Emanuel met Loewenstein in England, where he has spent many a season steeplechasing and riding to hounds. (He was once Master of the Woodland Pytchley hounds.) Between times he has thinned his hair, widened his girth by syndicate operations in a swivel chair. Still president of Standard Power & Light, he entered what he calls "the Aviation Corp. situation" in 1937. Last fall he strengthened his hold by a typical maneuver.

While Lou Manning, largest single stockholder and vice chairman of the ATCO board ($30,000 and up a year), was rusticating in California, fast-moving Emanuel got a line on the 320,000 shares of ATCO owned by the London Schroder interests. These he placed with two friendly interests: Lehman Bros, and General American Transportation Corp., which was fat with funds from building and leasing railroad rolling stock and seeking new markets in aviation.

Today Victor Emanuel is busy with "the Aviation Corp. situation," no longer rides to hounds, likes to talk of the Wordsworthiana collection with which he endowed Cornell. He does not like to talk of his plans for simplifying ATCO (or AVCO), on which CAA has long been casting a critical eye. "But," says he, "I think simplification is the only answer."

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