The Colt Mystery

A prime mystery of World War II is Hartford's famed Colt's Patent Fire Arms Manufacturing Co. Colt, as the biggest of all prewar U.S. gunmakers, had a backlog of $30,000,000 in orders when war came. And stockholders remembered that in 1917 Colt had paid a fantastic $60 cash dividend, later tossing in a 100% stock dividend to boot. But in March 1944, Colt stockholders got another kind of shock. For the first time in 27 years, Colt paid no dividend. On April 20 came shock No. 2. Up to board chairman went Colt's ailing president, Samuel M. Stone, who had driven Colt with a tight rein for 22 years. To the presidency came Graham H. Anthony, 52, a veteran Colt director.

New Boss Anthony lost no time in letting out the biggest shocker of all: in the first 16 weeks of this year, Colt had managed to lose $1,100,580, had actually been in the red since June 1943. The big question : how could a gunmaker lose money in the greatest war in history?

Get Out the Guns. By last week, hard-driving President Anthony had some of the answers. He was hard at work to pull Colt out of its queer hole, if anyone could. Gunman Anthony, born in Shelby, N.C., graduated from North Carolina State College into a job in a machine shop. By the black days of 1932 he was president of Veeder-Root, Inc. (mechanical counting devices) in Hartford, Conn. Veeder-Root was on the downgrade, as were so many firms, and losing money. Anthony managed to stop the skid and make Veeder-Root profitable. He is still board chairman. His strategy to save Colt: "Get out the guns."

WPA at Work. But getting out the guns at Colt has long been hamstrung by a 100-year-old handwork tradition. In trying to graft war production of 6,800 guns monthly onto peacetime artisan manufacture of 400 yearly, Colt fell into a fearful production tangle. Typical example: Colt numbered all barrels at the beginning of assembly, as they had always done, and would not test finished guns unless they came up in sequence. Result: when one gun was pulled out because of a faulty part, the whole test line stopped. Quipped one worker: "Production was like a Rube Goldberg cartoon--everyone and his brother was a foreman. . . . Mobs of men walked through the plant all day with books and no one knew what they did. ... It was like WPA."

Incentive Pay. But the deepest quagmire for production was a fantastic incentive pay plan. Colt had always had incentive pay. When mass production came to Colt, it kept the same piecework rates as for the slow handwork. Thus semiskilled filers came to earn as high as $8,200 a year, while the highly skilled toolmakers made as little as $3,000 a year. Result: many workers drew big pay for little work, had no incentive to work harder, fearing rates would be cut if wages, became too fantastic. Colt went through a series of small strikes. The War Labor Board spanked management as "largely responsible" for the wage mess. When WLB tried to even up wages by lowering some, raising others, Colt landed in a new mess over the cuts. Production slumped. In May Colt turned out only 31% of its scheduled number of .50-caliber machine guns, only 54% of its .45-caliber automatic pistols. only 55% of its .38-caliber automatics.

Another Brewster? New President Anthony took his coat off and charged. He called in workers, warned them that if their production did not rise, they would be let go. When production dawdled, Anthony fired some 42 workers. The next day pro duction started up. By last week guns were coming out at the pre-slump level. But all this jiggery-pokery had boosted the price of Colt machine guns some 60% above the price the U.S. Government pays General Motors and New Haven's High Standard (TIME, Oct. 25), to whom Colt leased its patents and "know-how." Already Anthony has made one price reduction. The swollen price netted Colt a profit of $1,010,196 last year. But in October 1943 the Army asked Colt to cut prices in line with those of other makers. Colt fell into the red. President Anthony frankly worries about how long the Army will buy Colt machine guns, when it can get them cheaper and faster elsewhere. The Army has held off mainly because Colt has done the experimental work for the Army on machine guns, and will still be making them in peacetime, when General Motors has gone back to autos. But President Anthony is not sure that this work is enough to guarantee continuing contracts. Said he sternly: "We don't want to be another Brewster."

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