The Founder Complains

One night in July 1915, young Alexander P. (for Procofieff) de Seversky, Russian-born flier, crashed in the Gulf of Riga, had his right leg blown off by the last of his own bombs. Next year he was back at the front, downed 13 German planes before the Revolution drove him to the U. S. Here he designed a bomb sight (not the bomb sight), sold it to the U. S. Army for $50,000 in 1923. With the $50,000 he started Seversky Aero Corp., which didn't do so well.

Undaunted, "Sascha" Seversky started over again, backed by his own White Russian charm and a rich, barrel-chested Wall Streeter named Paul Moore. For eight years their Seversky Aircraft Corp. lost money while Sascha made headlines. His bullet-shaped planes set one world speed record after another. At the end of 1938 Seversky Aircraft's backlog was zero, its losses (including "experimental costs") had averaged $1,000,000 a year.

To Moore and the other fed-up directors, Sascha himself suggested a way out: make W. Wallace Kellett vice president. Kellett's record was a moneymaker's. He operated Ludington Air Lines, first big airline to make a profit without a mail contract. He even made money from autogyros, sold the U. S. Army the only gyros it owns. The directors adopted Sascha's suggestion. Five months later they went further, made Kellett president, demoted Seversky (then in Europe) to director. Last October they changed the company's name to Republic Aviation Corp.; last May they threw Sascha off the board.

Under Kellett the company changed its pace. Three weeks after becoming president he cut the payroll of 500 to a compact working force of 185. By last week, 2,350 persons (more than double Seversky 's average) feverishly worked under the asbestos shingles, circus tents and blue sky of the rambling plant in Farmingdale. L. I. When Seversky was unseated, unfilled orders were less than $100,000. With a $10,000,000 Swedish order and $3,500,000 Army contract last year, backlog has climbed to $13,000,000. In the final three months of 1939 the company reported its first profit. In the first half of this year it earned a record $842,000. equal to 75-c- per common share. The company's stock, down to 50-c- in 1937, spurted to almost $7 this year.

But Seversky, dumped out of his own baby carriage, was sore. Last week he filed a $20,000,000 stockholders' suit. His counsel called this the "first move" to make Kellett and Moore (who owns 31% of the common, all 200,000 shares second preferred) tell why they have thrown out '"the man who built the corporation."

In ousting him, charged Seversky, stock holders lost their biggest asset, "his talents" as designer. Yet Republic's pursuit ships are still well designed. End of last March ex-War Secretary Harry Hines Woodring, telling the House Military Affairs Committee why he had released the fast Bell P39 and Curtiss P-40 to the Allies, explained that Republic, Bell and Lockheed were preparing better ships. Wall Street did not take Sascha's suit too seriously. The day following, Republic stock dipped 1/8.

This file is automatically generated by a robot program, so reader's discretion is required.