Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-08-22
BIZ CARLTON A. sHTvELY.

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NEW YORK, August Accompany
mergers in this country in recent years
reached their height while prosperity
and, above all, the stock market were
in fun swing. Economic justification
for mergers Is more eficient operation
through elimination Of duplicated Ia
cilities, greater indignation, diversity
Of products IN many cases, greater
financial power through the control OF
larger resources and saving Of wages
and salaries. 1t would be supposed
that hard times would give merger
movements considerable impetus. but
their comparative rarity during the
past year or two and their numbers IN
1927-29 Is not diflcult TO explain.
Financial Motive.
Some mergers Of industrial manufac-
turing and mercantile concerns come
through the ambitions Of the executive
heads. It is safe to say that, IN most
cases. the financial motive was the
principal one In the prosperity mergers.
Companies were merged right and left
without much regard 10 economies,
MANAGEMENT or anything else beyond
the appeal which the very mention OF
the word made TO the stock market.
Bankers and others promoting mergers
found it no great task to add together
fully capitalized assets Of one dollar for
one company and another dollar for Q
second and then obtain third dollar
through sale of stock TO the public
backed by what It was predicted the
large concern would do.
In addition 10 the most invariable
increase In capitalization without cor
responding rise in assets and earning
power, the mergers all too often In
volved huge bonuses given TO important
shareholders for their consent, heavy
fees to bankers for arranging terms and
floating new stock issues, and generous
who lost their jobs.
No recent mergers have involved sale
to the public Of additional securities,
and none Is likely to for . while. One
OF the other deterTents to merger i'm
pulse Is the Understandable desire Of
executives TO cling to their Jobs. Thus
the lack OF incentive on the part CT
bankers and other financial interests TO
promote mergers and the opposition TO
them by the managers Of company
are keeping In operation many COM
bined with others.
A. the period Of low earnings con-
tinues Wall Street believes that merger
resistance win be broken down, Already
It Is growing weak in the oil Industry.
where conditions are about as bad As
they can grow. The outstanding merger
in the oil industry this year was that
OF the Standard OH Co. of New York
and the Vacuum OIL Co, two Of the
original Standard Oil units. which
united in billion dollar organization.
Executive Jobs.
Another merger, which win involve
assets nearly IS large, Is now under
negotiation. The Sinclair Consolidated,
Praire Oil a. Gas, Prairie Pipe Line
(former Standard oil unitS), Rio
Grande Oh and Tidewater Associated
Oil are considering the exchange OF
their shares into q new holding COM
pany 70 be known as Commonwealth
Petroleum. Sinclair is the outgrowth Of
numerous mergers. Underwater AsSoci-
ated is the holding company formed In
1925 TO unite Tidewater OIL Co, largely
q First National Bank Of New York
concern, and the Associated OIL CO. of
California.
These negotiations, IL h understood.
are being delayed partly because Of the
question Of executive JOBS, but q merger
OF at least all but one Of the companies
concerned is virtual certainty. Wall
Street already has turned its attention
TO what 1t expects win be the next big
oil mergers reunion of Standard on
of New Jersey with Standard Oil Of
California, with q possibility Of ifaciud-
ing Standard OIL Of Indiana as well.
Talk Of union Of Jersey with Cali
fornia was begun tive .ysaf1 40 but