Corporations: Mother Bell's Christmas Present

In a nation that celebrates bigness, they come no bigger than American Telephone & Telegraph Co. It is the world's largest corporation, with assets nearly three times greater than General Motors'. It has more employees (729,000) than Montana has people. Its 2,250,000 stockholders outnumber all the Kansans in Kansas, and the $863 million they collected in dividends last year was the most ever paid by any corporation anywhere. Last week Mother Bell—as A.T. & T. is fondly called by those who live off her dividends-added another batch of superlatives to her extensive collection.

In one midday announcement, A.T. & T. proposed a 2-for-1 stock split that would increase its outstanding shares to 512 million, twice the number that next-largest G.M. has issued, and announced that in April it will raise its yearly dividend on present shares from $3.60 to $4. The company also declared that next year it will spend $3.2 billion on capital equipment—an alltime high for any corporation and almost 8% of the total that all U.S. industry is expected to spend in 1964. To raise about a third of this planned outlay, A.T. & T. in February and

March will give its stockholders the chance to buy 12,250,000 additional shares of stock. Not surprisingly, that will be the largest common stock offering in history, and more than all U.S. companies combined put on the block last year. A.T. & T.'s unconcealed aim in these maneuverings is to make its stock an attractive buy so that it can raise the capital it needs.

The company's staggering capital-spending program is a solid vote of confidence in the U.S. economy. Yet Wall Streeters—who before President Kennedy's assassination were preoccupied with the lack of a tax cut, a sliding market and a first-class scandal (see below)—greeted the news with relative indifference. A.T. & T. stock soared briefly to an alltime high of 1401, then joined the rest of the market in its downslide, was at 130 when all trading was halted after the assassination. Wall Street is not, of course, the nation, and to millions of small investors across the U.S., A.T. & T. epitomizes the way to a sound stake in the U.S. economy. Anything that Mother Bell does that sounds confidence for the future is ordinarily vastly important to their frame of mind.

Standing Still. The phone company is spending at a record pace because, as Chairman Frederick R. Kappel, 61, says: "Progress depends on building resources to move with, as well as on the will to move." At A.T. & T., all spending is divided into three parts: growth (future inventions), modernization, and standing still (catching up with present demand). Some $2,085,000,000 of the '64 spending will go into building exchanges, laying cables and wiring for 1,200,000 new telephone numbers, and stringing more intercity trunk lines and microwave relay stations for direct distance dialing. Modernization to replace operators with dials (the U.S. is now about 98% dial) will absorb $400 million, and just transferring phones for A.T. & T.'s mobile subscribers will take another $800 million.