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Detroit Free Press from Detroit, Michigan • Page 15

Detroit, Michigan
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Strait Thursday, Dec. 28, 1961 Page 13 SYLVIA PORTER New Fortunes In Hot Stocks Are Questioned WORLD OF WHEELS Turbine Cars Due In 1963 Midas Brake Adds Shops Plans for production of 50 to BY SYLVIA PORTER Wall Streeters and press agents who have made fortunes in hot new stock issues this year by "questionable" operations are now on the hot spot themselves. The United States Government's major financial policing agent, the Securities Exchange Commission, is reported to have evidence of manipulation of hot 75 turbine powered passenger cars in 1963 for selected customers were revealed in New York Wednesday by Chrysler Corp. BY FRED OLMSTED FrM Press Automotive Writer Gordon B. Sherman calls it a "social experiment" the way he runs Midas, the automobile muffler outfit that The cars will be different Xrom all others in the com pany's present line, distinc now has nearly 400 installing units across the country.

"You cannot control men. tively styled to capitalize on the different shape of the revo fat i' liyi -a fi 1 lutionary gas turbine engine. Prices are expected to be stocks in its file right now. It is said to have proof of activities which if not clearly illegal under our laws are at least flagrantly immoral. The SEC is about to get more evidence.

If even a few of the rumors being whispered in Wall Street today about fraud and deception in the marketing of new stock issues can be proved and the SEC will try hard to find the proof higher than those of the company's top-of-the-line Imperial because of the very limited The mechanics of a Midas launching is what Sherman calls the "static" part of the business. "The dynamic," says Sherman, "is the human vitality supplied by the operator himself." Sherman sums up the philosophy in one word: "Mutuality." says the 34-year-old ChJcagoan earnestly, "and if you try, you create revolution." The kind of revolution Sherman prefers is the kind he has created since Midas, was formed six years ago as a division of International Parts Corp. MIDAS HAS no "control" over the sea captain- in Fort initial production of the new power plant. Miss Porter TEST INTRODUCTION of the new car would be "a final evaluation" to determine whether the new engine would go into mass production. Worth, the re Mutuality has built business for Midas.

'The parent firm, International Parts, will do $23 million this year, of which Midas will account for 60 per cent. The same thesis has meant Mass production could be tired general in Ann Arbor, the TV newscaster in Seattle or achieved within five years. THE GAS TUKBIXE powering the Turbo Dart Is inspected In New York before the start of a cross-country evaluation run by Robert Anderson (left), Chrysler Corp. vice president, and George Huebner, research engineer. The plans were unfolded at to the others it has lined up that, for the $600,000 Midas spent nationally in advertising this year, its 400 outlets added about $2.5 million.

news conference here by Robert. Anderson, vice president and' director of product planning, and George J. Huebner, ex under the Mi TODAY IN BUSINESS das banner. The dynamic works for the "Only Influence," says baldish University of Chicago Sherman. Sherman "This means achieving to gether what a man can't Steel Process Is Put to Use achieve he adds humanities graduate.

Midas has loet only about 10 of the 400 it has helped into the business. DESPITE CERAMIC, stainless steel and aluminlzed mufflers, Sherman sees no close-up threat to the muffler business. "The muffler market looks better than it has for a long time," he declared. Sherman's organization operates under a franchise system, but it is a loose one. Midas helps qualified candidates (with ecutive engineer, the mastermind of the gas turbine project, and other Chrysler executives.

The details confirmed a story printed In The Detroit Free Press Sunday that the company might make a limited number of turbine-powered automobiles available In 1963. The news conference preceded the start of a coast-to-coast test run of the turbine engine in a 1962 Dodge, designated as the Turbo Dart, which is a re-styled and modified Polara model. Tire RTJV, on which Huebner if proof exists the resulting scandals will compel a reappraisal of all ethical standards in the financial marts and will lay the ground for stricter regulations as well as tougher laws. The SEC has just sent a long questionnaire to 20 corporations which since 1959 have sold stock to the pub-lie for the first time. Offerings Arc Traced The corporations are being asked to trace in detail the history of their stock offerings from the start of negotiations with the financial firms handling the deal (the underwriters) to the time trading started in the new issues in the over-the-counter market at levels double, triple or quadruple the initial offering price.

Simultaneously, the SEC has sent another long questionnaire to 500 or so securities firms which participated in the underwriting of the 20 corporation stocks or were active In trading of the shares immediately after the pablio offerings. These firms also are being asked to trace the history of their activities how they originally "came in contact" with the corporations, how and how much they were compensated for their services, whether "press releases" were handed out by "any public relations firm" or similar organization prior to the public offerings, what sort of financial relations they had with the corporations, etc. Gossip Is Common The director of the SECs probe sf the securities markets, Milton H. Cohen, is going out of his way to emphasize that the firms getting the questionnaires are not to construe the questions "as a reflection upon your firm or anyone connected with it." But of course, the SEC wouldn't be asking the searching questions it is asking had it not done plenty of homework. $15,000 to 125,000 to invest) be RV KENNETH A.

THOMPSON come part of the widespread operation that puts up to 1.5 Free Press Plnincltl WrtUr A steel process, invented by a Detroiter, which eliminates coke in the reduction of iron ore and cuts the cycle time fro m24-to-30 hours to 90 minutes is being employed in a new $l'2 million plant put into operation this week And now Midas is turning to something new. It Is experimenting with brake shops in seven cities, including Kansas City, St. Petersburg, Fla-, and Albany, ISY. They would be mostly sepa million mufflers on cars each year. Their profit says Sherman, averages 20 per cent on sales, before taxes.

"The whole thing Is carefully packaged," said Sherman. This means that Midas helps with nearly everything, lnclud- at Coolidge, Ariz. earnings year for the company in 1962. win new the crew of engineers, Julius D. Madaras, 67.

Is the is scheduled to end in Los An- licensor; or rather, the Madaras rate businesses, but might be combined with mufflers in geles about Jan. 1. jlng signs and advertising. smaller cities. A 1962 Plymouth also has Why brakes? They're even of Detroit, which Is a small group of men who have backed up his "Madaras Process." They include Robert B.

Powers, publisher of Ward's Automotive Reports; George Tilley, more important than mufflers, perhaps as much neglected, Those Fancy Jars! Now pickles are being marketed in attractive apothecary jars with Latin drug names appearing in gold letters, courtesy of Aunt Jane's Foods, of Detroit. AID SHERMAN I "We used to follow the shotgun approach offering to enter Into an arrangement almost anywhere an applicant desired. Now we have adopted the says Sherman. "And this would give us a chance to do what we havs done all over again," says the News Oil The Ticker Hercules Powder Co. proposed a 2-for-l stock split and announced plans for a multi-million-dollar addition to its plant in Harbor Beach, Mich.

All six members of the European Economic Community (Common Market) reported the rate of economic growth slowed down in the third quarter of 1961, with industrial production only 4 per cent higher than in the 1960 period. Muntz TV, reported sales of $3.4 million in the quarter ended Nov. 30, up 15 per cent from the 1960 period. New York Central Railroad cleared $4 million, or 63 cents a share, in November compared with $212,000 in the 1960 period, but still operated $15.8 million in the red in the first 11 months vs. a loss of $2 million in the first 11 months of 1960.

Construction contracts in November rose 4 per cent from a year earlier to $3 billion, F.W. Dodge Corp. said. Soviet news agency Tass reported Russia's volume of foreign trade has reached the level planned for 1965, has practically doubled in five years. Toledo Edison approved a $20 million construction budget for 1962 and increased the quarterly dividend to 20 cents.

Montgomery Ward said it will rent men's formal wear through its catalog and department stores. Business failures dropped to 173 last week from 306 a week earlier, Dun Brad-street said. marksmanship idea shooting serious and enthusiastic Detroit attor- ney; Arthur H. i Co nip ton, a No- bel Prize chem- 1st who pro Sears Arranges Travel on Credit been equipped with the turbine engine and has been shipped to Los Angeles, from where both cars later will start a tour of msjor cities for public display in dealer showrooms. Huebner left little doubt his remarks that Chrysler's present Intentions, at least, are to proceed Into mass production of the engine.

"We would not be standing before you today if we did not believe thst the trend which we have started already exists," he said. "People who have ridden In these turbine-powered cars like them. Preliminary cost studies havs indicated that if built in volume comparable with a pis duced the first Plutonium for atom bombs; and H. Lynn DAILY INVESTOR Traveling on credit is being carried in a bljr way to the at selected markets." One specification: a Midas shop must be (in most cases) in a city of at least 100,000. The franchised dealers are aided from the beginning by field counsellors, whom Sherman calls "virtuosos of commerce." They earn $23,00 and $30,000 a year.

Plerson, Allan Sheldon III and buyn- Russell Har- Sears, Roebuck, in an ar- It's common gossip in Wall Street that some- "public offerings" of stock haven't been public offerings at alL The underwriters have just gone through the motions of a public offering while they have placed most of the stock in the hands of Insiders and preferred customers. It's common gossip that some underwriters have made 1 NOW OPEN FOR LUNCHEON LiMSMe Settlies Thompson dy, Detroit industrialists and jrangement with American Ex- Any Stock Carries A Risk This Is where Midas' approach starts to show up. investors press, nas set up rn- Madaras system, in develop-LtOTrf subsidiary ment since the late '30s, merchandise American and hot hydrogen and natural tours t0 Scar" creditcus-for removal of oxygen and il-! on no-money-down phur from iron ore. It is most I Dasls- economical for soecialtv steels. The new service is introduced ton engine that turbine costs too can at least be SAVE 1 1 0" The Arizona plant, built by Sears 19" Spring-Sum- HUEBNER and Anderson South Dakota industrialists, ,,77 VT, emphasized that considerable will produce high-purity eteel few weeks.

frvm a rrnHrt man A rv9 work remains before mass in tAKN S. rta? troduction of the new power CURRENT RATI FIR ANNUM which a huge deposit has been Incidentally, a weighted av-discovered between Tuscon andierae ln categories Phoenix. The oroducinp- com.iin the catalog shows plant, including continuing con the insiders pledge to keep buying stock in the open market to push up the prices and swear not to re-sell until given the word. It is common gossip that some firms have rigged the prices of stocks by placing phony bids for the stocks in the over-the-counter market and have pulled their bids only after the gullible public has been sucked in. It's common gossip that some used public relations organizations to publicize the stocks and have paid off the organizations in cheap shares on which the press agents sumer and manufacturing research and additional cost and only a three-tenths-of-one-per BY WILLIAM A.

DOYLE Q. You wrote that a number of "guaranteed railroad tocksn are now selling at prices where their dividends provide a high yield for "relatively low-risk situations." If the dividends are guaranteed, how can there be any risk at all? A. Because there is risk in any investment. Some people can't seem to understand that, no matter what stock financial studies. Established in 189ft never missed paying a dividend 71 years of sound management, your assurance of security.

Assets over 74 million dollars. Dividends paid semi-annually on all savings. Poubeet sovlBft hi Me ISrft ef fee Meirrft ear from fee 1st. Ceme eheite er erfte fer nan kit. Capitol Savings cent increase, smallest rise in six years, Sears says.

Japan Monorail TOKYO UPi The Transportation Ministry has authorized the construction of Japan's first major passenger pany is Arkola Stel Co. Madaras, a young Hungarian scientist who was Interned by the Allies in World War came to this country at 30 and took additional engineering at Michigan State University. He later developed a plant using rotors for developing electrical The turbine, which will he used In passenger cars in 1963, will be about 100 pounds lighter than the one in the Dodge, which weighs 450 pounds, two-thirds the weight of a piston engine. It also will be quieter and 20 per cent more economical on Chairmen Named Miss Valore Marclnak, vice LOAN ASSOCIATION president of Tech Agency, and Donald C. Hyde of Steel magazine were named co-chairmen Seuthfleld Iranch TniSSouthfield At Eleven Mile Rd.

KE 7-4I2S EL e-7770 Downtown Washington lvd. ldJ 234 Sate Street WOodward J-1 071 ontiae 7S West Huron St. I bt. W. Courthouse FEderel 4-051 Trend of Slanle Prices you buy, you must assume that there is some risk involved.

Guaranteed rail stocks are no exception. This still goes, even though many of them Lansing (Home Office) new vork -api- The Aociatej Industrial Advertising Day fres wei9M(i wholesale price index of in Detroit next March 13 35 commodities Wednesday declined to power. In 1953 his steel process was accepted for a steel plant at Monterrey, Mexico. In this venture his royalty was cut off quickly and he was forced to accept an inadequate lump-sum payoff. MEMBER FEDERAL HOME LOAN RANK SYSTEM 'Pr1vloos dv 14415.

week eoo 144 TTTTTTTTTTTTTftttt tttttttWf ttttttff 1 Doyle month ho 163.41, veer aso 160.97. fT INI IN me leu Hloh 16 6 170 61 173 0 17 32 LOW IfrO.S OV.6 161.01 (1926 everaee eouals 100) We Ate Gtod fueL The new engine operates equally well on diesel fuel, peanut oil, gasoline, kerosene, alcohol, furnace oil or jet fuel. It has one-fifth as many parts as a conventional piston engine, requires no radiator, cooling system or antl-freeze and has only one spark plug. The jet of burning, expanding gas, as steam seeks an outlet from a kettle, spins blades at up to 45.000 revolutions a minute. could turn a fast profit.

It's common gossip that some have encouraged financial "analysts" to write favorable stories about the stocks by alloting them cheap shares which they could sell at a quick profit too. Before this Investigation Is many months older, a lot of 1961's get-rich-quickers in Wall Street are going to suffer countless agonizing hours. Chevrolet, Olds Sales Still Rising Parke-Davis Talks On Merger Ended Park, Davis linked several times recently with other drug companies in merger rumors and officially in the LLAK ON MACHINERY EQUIPMENT ACCOUNTS RECEIVABLE INVENTORY Our representative will cell The power thus generated Is market for favorable acquisitions, disclosed that its talks with Smith Douglas Virginia producer of commercial chemicals and fertilizers, have been cut off. Sales of Chevrolet and Olds- mobile in the second 10 days The Virginia firm, contem of December increased 45 per plating sale of its operations, has decided to continue in busi cent and 33 per cent, respec We followed a retailing trend to Suburbia, and opened "Demery's because We haxe made so many new friends and customers We have provided greater convenience to our customers living in Suburbia We have exceeded all of our forecasts and expectations We have established record year in the history of Demery's We are now considering plans for a third Demery's We Ate Ttug GtofefsuB For this evidence of your faith and good will. For your generous patronage and support tlvely, over the same period of 1960.

Continuation of the rate-of- UNION INVESTMENT CO, 4241 year 2-4 Fleer, First Nations! Ildej. WO 3-7474 ness. The disclosure came in a year-end statement by Harry J. Loynd, P-D president, in which he predicted a better sales and sale increase on the 1962 models was reported by K. E.

Staley, rate as good investments. A guaranteed rail stock is the stock of a railroad, whose property has been leased by another (usually much big ger) railroad. The big railroad normally guarantees to pay a fixed annual rental. That rental is passed on to the holders of the leased-line atock, as dividends. That's why such stock is called guaranteed stock.

The rental is a fixed obligation of the big railroad. It must be paid, just as salaries must be paid, fuel bills must paid, etc. A typical lease arrangement runs for many, many years. Many of these leases are perpetual. They last forever.

As long as the big railroad remains solvent, the dividend on the guaranteed rail stock wiU be paid. But, if the big railroad goes into bankruptcy suid does not pay the rental on the leased line, there will he no dividend to pass on to the guaranteed rail stock. That's the risk. (Mr. Doyle will answer only representative letters of general Interest in his column.

He cannot answer phone queries.) Dividends delivered mechanically to the wheels of the car. CHRYSLER'S original regenerative gas turbine made a similar road test in 1956. The latest endurance run will mark the completion of Si years of exhaustive laboratory and proving grounds performance testing and materials development. Huebner predicted that Chrysler's automotive competitors would greet the company's progress privately with "consternation, but publicly with great calm and a good deal of rationalization." Both Ford and General Motors have been testing turbine-driven vehicles for several years, but thus far have announced no plans to use turbines as power sources for privately-owned cars. Chevrolet general sales man ager, and Emmett P.

Feely, Olds general sales manager. CHEVROLET deliveries for the period totaled 57,154, Staley said, including 7,083 Chevy II, 8,999 Corvair and 41,072 regu lar cars. In the second 10 days of December, 1960, 39,370 cars were sold. Olds sales nationally in the LUe UMi IJtni t. II PRODUCt 11 I mmm' second 10 -day period totaled 12,453, up 12 per cent over the first 10 days and 33 per cent "Our announcements will be greeted with feigned incredulity, but the fact remains that they have yet to do what we A very happy holiday season with your family, above the 1960 period, Feely said.

have done," he said. friends and neighbors, and a healthy, prosperous New Year. Retail deliveries of 12,929 new Pontlacs and Tempests Huebner chlded other manufacturers for not developing the turbine for a pasenger oar. We can only say that they aimed too low," he during the second 10-day sales period in December were reported Wednesday by Pontiac Motor, a 22 per cent increase Wyandotte Savings Ban Quarterly dividend of 25 cents over the same period last year, a share, payable Jan. 2 to rec HIBBARD APARTMENTS 8905 Jtfferson EXECUTIVES SAVE THE TAX on new il'i THUNDERIIRDS FORDS See cell "RED" Kowel.

Immediete delivery All models. 19 Mi. 1 Creenfield ln FORD DEALER 10 3808 SCOTCH WHISKY 1 imavmmtnumm I 1 ord Dee, 22. Parke, Davis Co. Year-end extra dividend of 15 cents a share.

In addition to the regular quarterly dividend of 25 cents, both payable 31 to record Jan. 5. emery Detroit Binatnghaim One bedroom apartment fully carpeted with dining room. Also 2-bedreani apartment with din. Inq room.

Private parking avail, able. Adults only. See Mgr. er cell: VA i.717 President and General Manager IBS iAAAt4.A4AAA,wwXj. el.

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