SECURITIES: A Deal in British Stocks?

When they entered World War II, the British had nearly $5,000,000,000 of assets in the U. S. Of these assets the gold ($2,000,000,000), the marketable stocks ($1,010,000,000) and bonds ($70,000,000) have been steadily turned into bank balances, the bank balances into payments for munitions. Late last fall it was clear that the British were getting close to the bottom of the barrel (TIME, Dec. 2 et seq.). Now spending at the rate of almost $400,000,000 a week, the British will not have enough cash at this year's end to make their 1942 purchasing commitments.

At the very bottom of the barrel lies their least liquid sediment: some $850,000,000 (book value) of "investments in controlled enterprises," the unlisted securities of privately owned corporations. Such companies include giants like rayon-making American Viscose, British-American Tobacco's Brown & Williamson Tobacco Corp. (Kool, Raleigh). They also include many smaller fry: British Ropes, Ltd., J. & J. Cash, Inc. (woven names), Crosse & Blackwell (jam, etc.), Jaeger Co. (knit goods), Oxford University Press, Yardley & Co. (cosmetics), many another. Not listed on U. S. exchanges, stock in such companies is "unseasoned," would probably find an uncertain market.

Last week President Roosevelt asked Congress for power to give the British all the munitions they need, whether they can pay for them or not (see p. 15). But as a matter of practical policy his Government was meanwhile being more hardheaded. To the accompaniment of furious harumphs from some Britons, who tend to resent the war because it is taking their property away, Treasury officials held firmly to one policy: no gifts or loans of munitions until all British assets here are spent.

As tight-lipped T. J. Carlyle Gifford, liquidating agent for Britain's U. S. securities, proceeded to sell block after block of listed issues, one shrewd Wall Streeter watched with interest, figured it would soon be the turn of the unlisted items. How could they be turned into dollars? He had a plan. His name: Cyril J. C. Quinn. His address: Wall Street's $42,590,000 Tri-Continental Corp., an investment trust affiliated with the late Earle Bailie's banking house of J. & W. Seligman.

Fortnight ago, Quinn went to Washington to call on late Boss Bailie's good friend Henry Morgenthau. When he told him about his idea, Morgenthau decided it fell into SEC's bailiwick, called over Jerome Frank, who took along his stock-market regulator, Ganson Purcell, and his investment trust muckraker and regulator, cigar-rotating, handball-playing David Schenker. When Quinn laid the idea on the table, Frank quickly recognized it as one of his fondest.