Premature President

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It is not unusual for an officer of a company to assure shareholders regarding a future dividend. Usually the assurance turns out to have been well founded, as when last autumn Vice President George A. Ranney of International Harvester Co. said the dividend would be held at $2.50. But sometimes an officer speaks in order to help the price of the stock or before sounding out the directorate. Lately, shareholders have become wary of official statements. Last week their remaining faith received another jolt. On Sept. 29, fresh from Europe, President Simon Guggenheim of American Smelting & Refining Co. told reporters: "In consideration of the smaller stockholders, corporations should maintain dividends as long as it is possible to do so without the necessity of borrowing. . . . For what better purpose could surpluses be used than in the maintenance of dividends thereby creating goodwill and confidence of stockholders. I have always advocated that policy and believe that the American Smelting & Refining Co. will continue to maintain the dividend now." Eight days later Smelters shareholders were chagrined to hear that the directors had ordered a 25% reduction in the dividend—from $2 to $1.50 (against $4 early this year). Either upon returning to his office President Guggenheim had seen figures much poorer than he expected, or else the Smelters directorate, ten of whose 25 members are employes of the company, had voted the onetime (1907-13) Colorado Senator down. With a board of directors so favorable to him, it seemed most likely that the former was true, that President Guggenheim had spoken too soon.