“You’d better explain that to me, Sam,” she said quietly.
“He insisted on surrounding himself with yes-men, in making it a one-man operation.”
“Then why have you stayed?”
“Because I gave him my promise. I have to tell you something that sounds like I’m giving myself medals, Louise. I’m considered very very good in the field. I’ve been scouted, and I have had some very handsome offers from some very sound businesses. I’m apparently one of those so-called bright young men that industry can’t find enough of. I can’t put my finger on what the special talent is. Maybe it’s just a combination of being able to think clearly, handle people and work hard. I stayed because I gave my promise.”
“I haven’t got a good head for business, Sam. But it seems to me that ever since my father died, you and Mr. Dolson have been the ones who have been running the company into the ground. Warren thinks so, too. Look at it from my point of view. My brother Tommy and I each inherited fifty thousand shares of Harrison Common from Grandfather McGann’s estate when we were twenty-one. While my father was running the company it was always listed at right around thirty dollars a share, and it always paid a dividend of around two dollars or a little less.”
“I know that.”
“Tommy and I agreed to vote our shares for the same board and everything, and what happened? There hasn’t been a dividend since my father died, and now the stock is listed at twelve dollars.”
“Maybe you don’t understand the situation because nobody has been blunt enough about your father. Harrison has gradually been losing its competitive position for the last fifteen years. Management has been unaggressive and unrealistic. Not enough money has gone into modernization of plant and equipment, so production costs have been going up in relation to the other firms in the industry. So profits have been going down. The distribution system is antiquated and inefficient. We aren’t getting our fair share of the market. There was no reason to maintain that dividend rate. Your father was paying out in dividends money that should have been used for modernization. It was like … with a car, buying a quart of oil every ten miles instead of paying for a ring job. Louise, we’ve got to work like dogs to catch up. We had to pass the dividends. We’ve got to modernize and cut production costs, or we’re sunk.”
“How long will it take?” she asked me.
I shrugged. “The way it looks it should be another two or three years before we can start paying legitimate dividends. Then they’ll only amount to maybe two bits a share. But by then we should be getting healthy.”
“If things are as horrible as you say, then why is Mike Dean interested in the company?”
“Mike Dean is not interested in the company, Louise. Mike Dean is interested in making some money for Mike Dean. He doesn’t care if he sinks us without a trace.”
“Are you trying to frighten me?”
I despaired of trying to make her understand about Mike Dean. Mike Dean is a member of a small group of men who have come into curious prominence in the past few years. You see their pictures in Business Week and Fortune and Time. “This week, Mike Dean, suave and unscarred veteran of bitter proxy battles and corporate infighting, accused the management of the XYQ Company of a stale and unrealistic approach to the pressing problems of the industry.” Mike is always termea controversial, or a man of mystery. His thick thumb is in dozens of pies. He operates from a confusing web of interrelated corporate setups and has surrounded himself with a knife-sharp staff of C.P.A.’s, tax attorneys, engineers and management specialists.
The Mike Deans operate in the rich realm of capital gains. And they gain a spurious rectitude by cutting figures in the public eye in on the pies they bake.
I tried to explain it to Louise as simply as I could. “Mike Dean has people who spend their time reading balance sheets, Louise. They look for one special circumstance. They look for a company like Harrison, where the book value of the stock is higher than the market value. When we passed the dividends, we left ourselves open to an operator like Dean. The stock was selling at eleven or twelve. Try to follow me, now. Please. That means that with four hundred and forty thousand shares of stock outstanding, the company was valued in the market place at four million, eight hundred and forty thousand dollars. Yet, if we closed up shop tomorrow, liquidated everything, equipment, buildings, reserves, inventory, accounts receivable, we could realize a total of nearly nine million. That means our book value is twenty dollars a share. The differential is what brought Mike down on us like a wolf on the fold. We know that he started over a year ago buying Harrison Common very, very cautiously so as not to attract attention or force the price up. Three months ago he came out in the open and started his campaign to get proxies. We can estimate that he and his group own or control close to one hundred and ninety thousand shares of Harrison voting stock. When we have the Board meeting on the first of June, he can force representation on the Board of Directors, but he cannot take control. Let’s suppose he could take control. By a change in the dividend policy, and by liquidating some of the Harrison assets, he might be able to push the stock up to thirty-five or even forty. Then he could unload for a long-term capital gain, go over on the short side and ride the stock right back down into the ground. Say he personally holds one hundred thousand shares. I can see how he could make a profit of thirty dollars a share. And pay only a twenty-six per cent tax on his three million gain.”
She nibbled at her thumb knuckle. “How do you know he doesn’t want to do what you’re trying to do? I mean modernize and so on.”
“That’s what he’s announced he wants to do, naturally. But will he do that? Or is this just a raid? We thought we were safe, Louise. We didn’t know that you and Tommy might go back on your promise to Al Dolson. We thought the hundred thousand shares would be voted our way. Those shares are our margin of safety. But this morning Walt Burgeson at the bank phoned me at the office and asked me to come in as soon as I could. He told me what you’re planning to do.”
She gave me a furious look. “You make it sound as if we’re being sneaky. All this talk about going back on promises.”
“Now wait a minute.”
“You wait a minute, Sam Glidden. A very nice man named Fletcher Bowman was in town last week. He took Tommy and me to lunch. He works for Mike Dean. He explained that in all fairness Mr. Dean should be given a chance to explain his position to us because we are the two largest single shareholders and so we have the largest stake in what he’s trying to do. That seemed fair to us. We agreed. So, in Mike’s name, he invited the four of us—Tommy and Puss, and Warren and me—down to Mr. Dean’s place in the Bahamas. A private plane is going to pick us up Wednesday morning. Because we’re going down there doesn’t mean that we plan to betray anybody. Anyway, I’m curious about him and I’d like to meet him. And it will be a nice vacation.”
“I’ve heard about that hideout of his,” I said.
“We’re going.”
“Understand, Louise, I’m not trying to low rate your intelligence, or Tommy’s or anybody else’s. This kind of a deal is outside your experience. You’re getting mixed up in a very smooth operation. It’ll be a big snow job. Then suppose you and Tommy sign proxy forms down there and everything is just dandy.”
She got up quickly and walked away from me. She went over near the wall and sat on her heels and began picking dead leaves off a low bush.
“Suppose we do sign them? Suppose he does wreck the company?”
I went over and stood behind her. “What does that mean?”
She stood up and faced me, looking up at me.
“Just suppose I don’t give a damn any longer? Do you think I’m happy here? Do you think I look back on a madly gay childhood? Do you think I’m having a real dandy marriage? There’s enough income from the things my father left to keep this house up and live here. If the dividends were still coming in, we wouldn’t be here. So I sound like a spoiled brat. I’m still trying to make a marriage work. And it doesn’t w
ork well at all here in Portston. I can tell you that much. So suppose he does take over. The stock will go up, won’t it? He’ll make it go up. And then I can sell the damn stuff and get away from here for keeps.” And she turned abruptly to hide tears and began picking off the dead leaves again.
“Let me be corny for a minute, Louise.”
“Go right ahead,” she said in a muffled voice.
“In 1858 your great-great-grandfather, Aaron Harrison, started the company. His only daughter, Jessica, married the first Tom McGann. They were a rugged pair, Aaron and Tom. They built this house.”
“No. It was his son.”
“At any rate, they felt their obligations to the company and to the community. They bulled their way through panics and depressions. They had maybe too paternalistic an attitude toward labor, but they did the best they could in the tough times. When your father took over he had as much strength and power as the earlier ones, but he lacked their shrewdness. And he had just as much a feeling of responsibility as anyone in the past. Your brother is a great guy; but he couldn’t run a hot dog stand, as you well know. Maybe I’m simple, but to me a company like this is more than something you make money with. It supports directly or indirectly a couple of thousand families and a way of life that doesn’t seem too bad to me. If Dean should wreck the firm, he also wrecks the town. But, naturally, you won’t have to give a damn about that. You’ll be living in Amalfi or Cuernavaca or Malaga.”
She turned to look up at me over her shoulder. “Very touching,” she said, but her eyes were still shiny with tears.
“I don’t think you ought to go.”
“It’s all arranged.”
I could see all of our planning shot to hell. I could see Al Dolson throwing in the sponge. When Thomas McGann died, Al had been vice-president, and I had been his assistant. He was a mild man in his late fifties. Maybe once upon a time he had some push; but too many years of McGann had driven him back into a polite shell. When the Board, with Walt Burgeson as chairman, had made Al Dolson president, they had made me vice-president. Some of the other men felt that I had been jumped over their heads, that I was too young, and my ideas were too wild; but I had been able to kill off the resentment and get them all pulling together.
I felt as if I were propping Al Dolson up. He was too hesitant about using the authority he held. When we first learned that Mike Dean was snapping at our heels, Al was all set to give up. But I had managed to get him back on the rails. Right after McGann had died we had been in a tunnel where we couldn’t see light ahead. But in the last year we had rounded a bend and you could begin to see a far-off glimmer. There was a new bounce and confidence to management. I managed to get Al feeling as I did: that even if Dean did place some people on the Board of Directors, we’d still have enough backing to go ahead in our own way.
But if he felt that the McGann kids were going to sell us out to Dean, thus giving him control of close to seventy per cent of the voting shares, Dolson would fold in on himself like a tissue paper tent. I felt that in a few years he would be all right. He’s bright enough, and he’s gaining confidence. But this was happening too soon.
I knew that Louise had enough of the McGann stubbornness in her so that I couldn’t get her to change her mind. And perhaps she felt it would help her marriage to get away for a while with her husband. I had heard that Warren Dodge did more than his share of tomcatting since they’d moved back to Portston. It’s too small a city for much of that.
I could think of only one answer. I checked over what I had lined up to do in the next week. By working like hell the rest of today and all of tomorrow I could get it fairly well cleaned up.
“Okay, so you’re going, Louise. But let’s say you ought to have somebody around in case you have to ask some questions. Would you object if I went along, too?”
She stood up and she looked agitated. “No, but … but you’re not invited.”
“You could fix that with a phone call, I think. Call the man. Bowden?”
“Bowman. Fletcher Bowman. I have his New York number, yes. But …”
“Louise, this is not a social occasion. I am not crashing a party. If you suggest I come along they’re going to have to say yes, because they can’t afford the impression they’d make by saying no.”
Though I wanted to ask to listen on an extension, I waited in the garden. I picked up the book she had been reading and glanced at some of the pages in the middle. A Faulkner novel covering the further adventures of the Snopes family. I wished for more time to read, more time to be by myself. The last two and a half years had been full of furious activity that, at times, had seemed meaningless. The past week I had spent two days out on the coast with Gene Budler—our sales manager—and Cary Murchison of engineering. Gene and I had to explain the new distribution setup to the western wholesalers. We planned to use it as a test area. They were enthusiastic about it. And then Cary Murchison and I spent the rest of the time poking around in some warehouses full of machine tools recently declared surplus by Army Ordnance. We found a lot of stuff we could use, had a public stenographer type our bids and left them with the military along with a certified check for two hundred and twenty-one thousand dollars.
Every week had been patch and pray, trying to remedy the neglect of two decades and at the same time build soundly for the future. The two most pressing problems coming up were to get some aggressive styling for the new lines, and do battle with the union about work standards.
Louise came back out into the garden. “He acted as if he didn’t quite know how to take it at first, and then he got very jolly and said, ‘Of course, of course. Do bring Mr. Glidden along.’ ”
“Those boys don’t move until they’ve checked every angle. They’ll have a complete file on me. Now they’ll be planning how to handle me.”
“You make them sound so conspiratorial, Sam.”
“That’s what they are. I’ve got a lot to do before Wednesday morning. What time?”
“Be at the airport at nine-thirty. Mr. Bowman said it will be hot in the Bahamas, and to bring swim clothes and sun clothes. Nothing very formal.”
We went through the gate in the garden wall and around to my car in the driveway. “Are you sorry I invited myself aboard?” I asked her.
She looked up at me gravely. She shook her head. “No, Sam. I’m not sorry. I think I feel a little better about everything. I think I snapped at you because I was feeling a little bit guilty. I don’t know … just what I want to do.” She smiled in an apologetic way. “I guess I must be a little mixed up these days.”
I swung the car around in front of the garages and headed back down the drive to Walnut Street. I looked in the rear-view mirror and saw her standing in the morning sun in the middle of the wide graveled place, looking small and alone, but standing very straight in her little white shorts and her little red halter, standing with a kind of indelible pride.
As I drove away I felt a bit hot-faced about trying to load her up with the corn-fed speech about the Gurrreat American Way. But, hell, I meant more than half of it. And I had thought there might be a chance she had inherited just a little of her old man’s feeling of responsibility not only to the company but to all of Portston.
I had planned to go back to the plant, but decided it could do no harm to advise Tommy McGann of my self-invitation to join the party. That would give me a chance to sound him out about his reaction to Mike Dean. I phoned from a drugstore and their house man said that Mr. and Mrs. McGann were home, and when he came back on the phone he told me to come right out.
Their rangy fieldstone house was in the hills west of town, the only private home in the area with a private airstrip. It was the result of the Texas approach of Tommy’s wife, Puss, and at present it accommodated their latest, a sleek and nimble Piper Apache with twin Continentals, retractable tricycle gear. Their house man told me they were out in back. I walked around the house. Tommy was in torn and faded khaki shorts and Puss was in a green swim suit and they were
playing some kind of a game with great energy. There was a tall pole set in the lawn with a ball fastened to a long cord tethered to the top of it. They were armed with wooden paddles, and the object seemed to be to whale the ball past your opponent so that the cord wound itself around the pole.
Tommy noticed me first and yelled, “Grab a chair, Sam. Be with you in a couple of minutes, soon as I whup this creature.”
I swung one of the chairs by the pool around so that I could watch them. Tommy is thirty-five, eight years older than Louise. They are the same physical type, dark, fine-boned, almost delicate looking. Tommy has Louise’s long heavy black lashes, the fine lean hands. But there is nothing at all effeminate about him.
When he was seventeen in 1939, he ran away to Canada and lied his way into the RCAF. He flew an incredible number of missions with the RCAF and the RAF. He bailed out twice, once with burns that kept him three months in the hospital. He transferred over to the American Air Corps in forty-three and flew fifty missions of fighter cover with the Eighth Air Force. Then, over his protests, he was sent back to the states as an instructor. At Randolph Field in Texas, during gunnery practice, a student shot him out of the air. One slug tore away half his jaw. The chute popped open so low that Tommy landed with an impact that gave him, by count, twenty-one fractures when he hit the baked hide of Texas.
Two years later when he hobbled out of the hospital, he was a twenty-four-year-old retired Lieutenant Colonel with an eighty per cent disability pension, with extensive and not entirely successful cosmetic surgery, and with an eighteen-year-old Texas bride called Puss, youngest daughter of an oil and cattle family which gave them, as a wedding present, a few little ole producing wells. He had met her when she had come to the hospital to cheer up the injured.
A Man of Affairs Page 2