Hauling Down the Horse Flag?

In the 1860s, when maritime raiders roamed the East Coast to lure sailing ships onto reefs and loot them, a mustached sea captain, Israel J. Merritt of New York, organized an honest salvage operation. Merritt's aim was to save a vessel from sinking if he could--or, if he could not, to salvage it and its cargo. He succeeded so well that his firm, joined by two others, grew into Merritt-Chapman & Scott, the nation's largest corporation involved in marine salvage, and later a construction giant as well. But eventually, Merritt-Chapman & Scott itself fell prey to raiders of a modern sort. As a result, the company has been sinking slowly--to the point where its officers announced last week that they will propose liquidation when shareholders meet next month.

Selling Off. Merritt-Chapman's fate was to be taken over in 1951 by Louis E. Wolfson, now 55, perhaps the U.S.'s most renowned corporation raider. Since he became the principal shareholder Wolfson has been stung with a dozen suits by angry investors, last fall was indicted by a federal grand jury on charges of fraudulent dealings in Merritt-Chapman stock, which could cost him 14 years in jail.

Such stock manipulations, if they occurred, are only one of Merritt-Chapman's misfortunes under Wolfson. Another is that he tried to build up and broaden the company too fast. Bled by such acquisitions as the unprofitable New York Shipbuilding Corp., the firm's profits and dividends have been dropping; in 1966, there was a loss of $740,000 and no dividend at all. To halt the drain, Wolfson sold off a paint company, a small steel mill, the company's derrick division and a small shipyard, but the future seems so stormy that liquidation may be the only solution. Along with its losses on operations last year, Merritt-Chapman also added a $3,233,000 "special charge" to the books as a provision against losses if other properties have to be sold.

Maine to Normandie. If Merritt-Chapman & Scott has to haul down its famous blackhorse house flag, which has waved since Israel Merritt's day, a remarkable tradition will die. When the Maine blew up in Havana harbor, touching off the Spanish-American War, it was Merritt-Chapman that the U.S. Government called on to determine whether the mysterious blast came from inside the hull or outside. Investigators decided that it was external, but some historians still disagree. Years later, the organization was summoned to raise a far bigger hull, the capsized Normandie, which caught fire and turned over at a Manhattan pier during World War II.

In the past two decades, Merritt-Chapman has had a hand in more than $1.5 billion worth of construction work, including the Mackinac Bridge, the Chesapeake Bay Bridge-Tunnel, the Niagara Power Project, the Glen Canyon Dam in Arizona, Priest Rapids Dam in Washington and the New Jersey Turnpike. The company also undertook smaller projects ranging from roads in Ethiopia to Air Force early-warning stations in Labrador.

Should Merritt-Chapman & Scott, by some stroke of genius, avoid liquidation, it would have to get along without Wolfson. Stung by the suits and charges against him, Wolfson protests that "when you can't be an individual, a pioneer, I'm getting out." Israel Merritt had a different view of pioneering.

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