Bare Knuckles in Chicago

The fight between Louis Wolfson and Sewell Avery for control of Montgomery Ward reached the bare-knuckle stage last week. As Challenger Wolfson invaded Chicago, Avery's home ground, on his cross-country "coffee-cup" courtship of Ward stockholders, Avery let him have it.

In full-page newspaper ads and in Ward's annual report, Avery charged that the security" of Ward's stock "would be destroyed" if Wolfson were placed in control. Possibly to take his stockholders' minds off the fact that Ward's 1954 earnings showed a drop from $6.12 a share to $5.20 a share, Avery charged that Wolfson had 1) milked Washington's Capital Transit of its cash surplus "at the same time he reduced the service" and got five fare raises to avoid losing money 2) swapped stock of his Merritt-Chapman & Scott Corp. for stock of his New York Shipbuilding Corp. at a profit of $816,000, and 3) permitted his family-controlled companies to make money selling supplies to publicly owned companies he controls.

Counterattack. The challenger's road show took it in stride. Newsmen summoned to the presidential suite on the 23rd floor of Chicago's Conrad Hilton Hotel found Wolfson perched modestly on the edge of his seat while onetime Notre Dame Football Coach Frank Leahy who will organize stockholder committees' delivered a testimonial: "Louis is one of the cleanest persons I have ever known clean in mind and body. He is a really better person than 95% of the Catholics I have known and I have known a lot."

Ihe next day, before the 2,113 people jampacked into the Conrad Hilton's grand ballroom, Wolfson took the fight to Avery. He compared Ward's earnings of 5.5% on investment to Sears's 13%, J. C. Penney's if he couldn't do better, said Wolfson he "would tender my resignation and walk out." He reported spending $350,000 so far on the proxy fight, added he expected the stockholders would be "glad" to repay him if he won.

Wolfson replied to the Avery charges point by point. He said that he had raised Capital Transit's annual earnings from $332,000 to more than $1,000,000, eliminated its funded debt. He said he made not $816,000 but considerably less on the Merritt-Chapman & Scott-Shipbuilding stock swap, and anyway, it was all "paper profit." Yes, his firms bought from one another, but only when they were the bona fide low bidders. Actually, such purchases amounted to only 1.75% in the case of New York Shipbuilding and 75% for Merritt-Chapman & Scott. Charged Wolfson: Montgomery Ward is "the poorest managed and operated corporation in America with $500 million net or more."

New Names. Wolfson also named candidates Nos. 4 and 5 to his proposed nine-man slate of Ward directors (the first three: Wolfson himself; Robert Black president of the White Motor Co. : William J. Hobbs, onetime Coca-Cola president). One was topflight Advertising Woman Bernice Fitz-Gibbon of New York, the famed sloganeer who originated Macy's "It's smart to be thrifty," and "Nobody, but nobody undersells Gimbels." The other: E. W. Endter, risen-from-the-ranks president of California Oil East Coast subsidiary of Standard Oil of California. Endter told reporters that he had resigned when forced to choose between his $50,000-a-year job and his pledge to Wolfson to join his slate. Said Endter: "Everyone said I must be crazy. I left without a dime from the company."

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