Chapter VI

REPORT ON AUTOMOBILES, AUTOMOBILE ACCESSORIES AND TIRE MANUFACTURERS’ SECURITIES FROM A FINANCIAL AND INVESTMENT STANDPOINT.

Compiled specially for use in this book by THE BUSINESS BOURSE INTERNATIONAL, INC. New York City.

(1) Economic history and its relation to stock trading in the automobile industry.

(2) Securities of companies traded in on New York Stock Exchange.

(a) Names of companies.

(b) Amount of stocks and bonds outstanding.

(c) Par value traded in during 1906-1909-1912-1916.

(d) High and low prices—range of each class by chart.

(e) Dividends or interest paid.

(3) Securities of companies traded in on New York Curb Market 1906-1909-1912-1916.

(a) Names of companies 1906-1909-1912-1916.

(b) Amount of stocks and bonds outstanding 1906-1909-1912-1916.

(c) Number of shares traded in during 1906-1909-1912-1916.

(d) High and low prices—range of each class by chart.

(4) Securities on various exchanges in other cities and data for 1916.

(5) Principal companies whose securities are not generally traded in.

(6) Some leading examples of prices and terms and promotion plans upon which securities were put out.

(7) Newer entrants into the security market.

(8) Security issues of tire companies.

(9) Some leading examples of appreciation or depreciation in value of such stocks since they were put out.

(10) General comparison with

(a) Railroad securities.
(b) Steel and iron.
(c) General industrials.
(d) Mining.
(e) Chart illustrating above.

(11) Present trend of values of

(a) Automobile securities.
(b) Automobile accessory securities.
(c) Tire securities.

(12) Possible future trend in automobile industry as a basis for the future outlook for 1917 on its securities.

ECONOMIC HISTORY AND ITS RELATION TO STOCK TRADING IN THE AUTOMOBILE INDUSTRY.

That it may be possible to comprehend the tendencies and probable trend of activity in the motor stock market, it will be necessary to look back at economic conditions which prevailed at the time of the automobile’s infancy, and at the conditions during various periods since then.

No industry in our times has shown such phenomenal growth and in no country has its development been so marked or reached such proportions as in our own.

In the earliest stage of the industry, the automobile was accepted as a fad, and it has been stated that the American people took hold of the fad as an intoxicant, paying as high as from $6,000 to $12,000 for a car, and reveled in all the natural resultant vices of extravagance, snobbishness, excess and carelessness. Houses were mortgaged and ruin was accomplished for many who paid high prices and then could not stand maintenance and repair cost.

The relative effect on business then became apparent. Bankers protested and entered complaint against the automobile as a degenerating factor in life. Automobile manufacturers expanded lavishly, over-capitalized, undertook to effect great stock-jobbing consolidations, until conservative financiers took steps to stop the harmful waste and inflation and many bubbles burst.

During this period, therefore, stocks of the automobile group were looked upon skeptically, and were scarcely known in the legitimate market before 1912, with the exception of a few scattered stocks, some of which are now altogether out of existence or merged in new companies.

While stock trading did not come into general prominence until within the last five years, it is agreed that economic conditions have had a big influence in bringing about this recognition.

In further considering the outlook in this industry, it is necessary to analyze the buying power of the population. This will have a decided effect upon stock activity, which the remarkable history of this industry has placed in a class almost by itself.

The people of the country never before enjoyed the money earning possibilities now in order, but to offset this is the high cost of all articles going to make up the necessities and luxuries of our increasingly complex modern existence.

In 1906 there were registered (mostly by buyers of an earning capacity of $3,000 or more) 48,000 automobiles. Since then registration has increased 5,000 per cent, due to the changes in the average price of automobiles. Investigation shows that the average price of an automobile in 1907 was $2,123, while in 1916 it dropped to $820.

_The following chart shows the changes in the average price of automobiles since 1904:_

In very few years this infant industry has grown to rank as one of the most important in this country, and it is plain to see how conclusively the industry’s influence has produced an economic effect upon our national life. The farmer’s life has been made more attractive. Cities have expanded into suburbs, thus affecting and influencing values on both urban and suburban real estate. Good highways are demanded. Thus it can be recognized the strong hold this industry has upon the nation at large, nor do present signs indicate that it will cease to grow.

SECURITIES OF COMPANIES TRADED IN ON NEW YORK STOCK EXCHANGE.

In making an analysis of this subject an expose along the following lines will disclose a definite basis upon which to make a survey of the history of past activity in the securities of a given industry, comparisons with other parallel industries, the present condition of markets for securities of these industries, and a forecast of what the general tendencies are likely to be.

The securities of the companies manufacturing automobiles, automobile accessories, and tires which have been traded in on the New York Stock Exchange for the years 1906, 1909, 1912 and 1916 are shown in the following tabulation, which gives an interesting exhibit from which it is readily seen how this young giant of modern industry is the product of comparatively recent growth:

1916 1912
Name High Low High Low
Ajax Rubber Co. 89-1/8 63 ..... .....
Chandler Motor Co. 131 88 ..... .....
General Motors Co. (C) 850 405 42-7/8 30
(P) 128-1/2 108 82-3/4 70-1/4
B. F. Goodrich Co. (C) 80 57-1/8 81 60-1/4
(P) 116-3/4 110 109-1/2 105
Kelly-Springfield Tire Co. (C) 85-1/4 56 ..... .....
(P) 101 95-3/8 ..... .....
Lee Tire & Rubber Co. 56-1/2 25-1/8 ..... .....
Maxwell Motors (C) 99 44 ..... .....
(1-P) 93 65 ..... .....
(2-P) 60-7/8 32 ..... .....
Saxon Motors Co. 84-3/4 63-7/8 ..... .....
Stutz Motor Co. 79-1/2 48-1/2 ..... .....
Studebaker Motor Co. (C) 167 100-1/8 49-1/2 30
(P) 114 108-1/4 98-1/8 90-1/2
U. S. Rubber Co. (C) 70-3/4 47-3/4 67-7/8 45-1/4
(P) 115-1/4 106-1/8 116 105-5/8
..... ..... 85-1/2 75
White Motor Co. 59-3/8 45 ..... .....
Willys-Overland Co. (C) 81-1/4 34 ..... .....
(P) 117 94 ..... .....
Rubber Goods Mfg. Co. ..... ..... 107 105
..... ..... .....

1909 1906
High Low High Low
Ajax Rubber Co. ..... ..... ..... .....
Chandler Motor Co. ..... ..... ..... .....
General Motors Co. (C) ..... ..... ..... .....
(P) ..... ..... ..... .....
B. F. Goodrich Co. (C) ..... ..... ..... .....
(P) ..... ..... ..... .....
Kelly-Springfield Tire Co. (C) ..... ..... ..... .....
(P) ..... ..... ..... .....
Lee Tire & Rubber Co. ..... ..... ..... .....
Maxwell Motors (C) ..... ..... ..... .....
(1-P) ..... ..... ..... .....
(2-P) ..... ..... ..... .....
Saxon Motors Co. ..... ..... ..... .....
Stutz Motor Co. ..... ..... ..... .....
Studebaker Motor Co. (C) ..... ..... ..... .....
(P) ..... ..... ..... .....
U. S. Rubber Co. (C) 57-5/8 27 59-1/2 38
(P) 123-1/2 98 115 104-3/4
89-1/2 67-1/2 87-1/2 75
White Motor Co. ..... ..... ..... .....
Willys-Overland Co. (C) ..... ..... ..... .....
(P) ..... ..... ..... .....
Rubber Goods Mfg. Co. 105 105 43 42
..... ..... 108-1/2 100

Sales in
Dividends Bonds 1,000 High Low
Name Paid Outstanding 1916 1916 1916

Ajax Rubber Co. 1916—10 % None ..... .....
Chandler Motor Co. 1916— 7 % None ..... .....
General Motors Co. (C) 1915—50 %
1916—25 %
1909—150 % Stk. Div.
(P) 1911 to 1916 (inc.)—7% None
B. P. Goodrich Co. (C) 1912—2 %
1916—4 %
(P) 1912—3-1/2%
1913 to 1916 (inc.)—7% None
Kelly-Springfield
Tire Co. (C) 1915— 6 %
1916—16 % $270,000
(1-P) 1914—3%
1915-6 6 %
Lee Tire & Rubber Co. 1916—$2.25 per share None
Maxwell Motors (C) 1916—2-1/2 %
(1-P) 1915—5 %
1916—7 %
(2-P) 1916—1-1/2% None

Sales in
Dividends Bonds 1,000 High Low
Name Paid Outstanding 1916 1916 1916

Saxon Motors Co. 1916— 3-1/4%
Stutz Motor Co. 1916— $1.25 per share None
Studebaker Motor Co. (C) 1915— 5%
1916— 10%
(P) 1912 to 1916 (inc.)— 7% None
U. S. Rubber Co. (C) 1911— 1%
1912— 4%
1913— 5-1/2%
1914— 6%
1915— 3% $69,000,000—5% ..... ..... .....
(1-P) 1906-16 (inc.)— 8% 16,500,000—6% 1782 103-1/2 101¾
(2-P) 1906-16 (inc.)— 6%
White Motor Co. 1916— 5-1/4% None
Willys-Overland Co. (C) 1913— 11%
1914— 6%
1915— 11%
1916— 14%
(P) 1913 to 1916 (inc.)— 7% None
Rubber Goods Mfg. Co. None

Stocks Shares Shares
Traded in Traded in
Name Outstanding 1916 1912 1909 1906

Chalmers Motor Co. $ 464,000 36,566 ..... ..... .....
Chevrolet Motor Co. 23,909,000 660,550 ..... ..... .....
Emerson Motor Co. 7,000,000 116,990 ..... ..... .....
Falls Motor Co. 24,850 ..... ..... .....
Grant Motor Co. 2,000,000 93,240 ..... ..... .....
Preferred 1,000,000 ........ ..... ..... .....
Hupp Motor Co. 5,000,000 130,130 ..... ..... .....
Preferred 1,500,000 ........ ..... ..... .....
Imperial Carbon Chaser Co. 1,000,000 637,850 ..... ..... .....
Keystone Tire & Rubber Co. 1,000,000 137,200 ..... ..... .....
Preferred 500,000 33,800 ..... ..... .....
Mitchell Motor Co. 125,000 80,495 ..... ..... .....
National Auto Corporation 61,865 ..... ..... .....
Peerless Motor Co. 10,000,000 135,263 ..... ..... .....
Pierce Arrow Motor Co. 250,000 52,300 ..... ..... .....
Preferred 10,000,000 1,600 ..... ..... .....
Republic Motor Truck Co. 62,500 20,870 ..... ..... .....
Scripps Booth Co. 70,000 27,725 ..... ..... .....
Smith Motor Truck Co. 10,000,000 39,500 ..... ..... .....
Springfield Body Co. 1,750,000 26,481 ..... ..... .....
Preferred 750,000 11,461 ..... ..... .....
Standard Motor Co. 1,800,000 47,490 ..... ..... .....
Stromberg Carburetor Co. 50,000 72,050 ..... ..... .....
United Motors 1,195,000 1,297,355 ..... ..... .....
Studebaker Co. ......... ......... 16,973 ..... .....
Preferred ......... ......... 4,717 ..... .....
U. S. Motors Co. ......... ......... 53,393 ..... .....
Preferred ......... ......... 54,433 ..... .....
Willys-Overland Co. ......... 2,570 13,045 ..... .....
Preferred ......... 4,350 11,045 ..... .....
Goodrich B. F. Co. ......... ......... 40,846 ..... .....
Preferred ......... ......... 32,211 ..... .....
General Motors Co. ......... ......... ..... 1,406 .....
Consolidated
Rubber Tire Co. ......... ......... ..... ..... 2,843
Preferred ......... ......... ..... ..... 410
Ajax Rubber Tire Co. ......... 102,065 ..... ..... .....
Alliance Rubber Tire Co. ......... 14,400 ..... ..... .....
Preferred ......... 3,200 ..... ..... .....
Electric Vehicle Co. ......... ......... ..... ..... 1,000
Preferred ......... ......... ..... ..... 3,705
American Motor Co. ......... 24,500 ..... ..... .....
Pope Mfg. Co. ......... ......... ..... ..... 1,250
1st preferred ......... ......... ..... ..... 3,790
2nd preferred ......... ......... ..... ..... 5,450
Chandler Motor Co. ......... 40,985 ..... ..... .....
Enger Motor Car Co. ......... 7,456 ..... ..... .....
Essex Motor Co. ......... 9,950 ..... ..... .....
Fisk Tire Co. 8,000,000 1,695 ..... ..... .....
Fisher Body Corporation 200,000 20,130 ..... ..... .....
Preferred 5,000,000 3,900 ..... ..... .....
General Motor Co. ......... 89,250 ..... ..... .....
Preferred ......... 13,416 ..... ..... .....
Intereon Rubber Co. ......... 76,848 ..... ..... .....
International Motors Co. ......... 8,441 ..... ..... .....
Preferred ......... 3,626 ..... ..... .....
Kelly-Springfield ......... 435 ..... ..... .....
Kelsey Wheel ......... 4,500 ..... ..... .....
Lee Tire ......... 41,175 ..... ..... .....
Met. Motors Co. ......... 2,825 ..... ..... .....
Motor Products Co. 100,000 17,370 ..... ..... .....
Perlman Rim 100,000 119,780 ..... ..... .....
Princess Motor Co. ......... 6,362 ..... ..... .....
Republic Motor
Truck Co. preferred ......... 300 ..... ..... .....
Saxon Motor Car Co. ......... 102,226 ..... ..... .....
Stutz Motor Co. ......... 200,245 ..... ..... .....
Times Sq. Auto Sup. ......... 13,750 ..... ..... .....
Universal Motor Co. ......... 68,450 ..... ..... .....
White Motor Co. ......... 626,220 ..... ..... .....

NEW YORK STOCK EXCHANGE.

The rise in average price of the automobile securities traded in on the New York Stock Exchange, as shown on the chart, is due to the general expansion and increase of the automobile industry which was naturally reflected in the securities.

_The following chart shows average price of all automobile and automobile tire stocks traded in on the New York Stock Exchange for years 1906-9-12-16:_

SECURITIES OF COMPANIES TRADED IN ON NEW YORK CURB MARKET.

The securities of companies manufacturing automobiles, automobile accessories and tires, which were traded in on the New York Curb during the years 1906, 1909, 1912 and 1916 are shown in the following tabulation. Some of these curb stocks have graduated to the big exchange.

1916 1912
Name High Low High Low
Chalmers Motor Co. 39-1/2 33 ..... .....
Chevrolet Motor Co. 278 114 ..... .....
Emerson Motors Co. 4-1/2 1-1/4 ..... .....
Falls Motor Co. 13 6-1/2 ..... .....
Grant Motor Co. 14 7 ..... .....
Hupp Motor Co. 11-3/4 5-1/8 ..... .....
Imperial Carbon Chaser Co. 53 12-1/2 ..... .....
Keystone Tire & Rubber Co. 19-5/8 11 ..... .....
Preferred 18-1/4 12 ..... .....
Mitchell Motor Co. 73-1/2 51-1/2 ..... .....
National Auto Corporation 44-1/2 33 ..... .....
Peerless Motor Co. 31-1/2 18 ..... .....
Pierce Arrow Motor Co. 65 42 ..... .....
Preferred 109 101 ..... .....
Republic Motor Truck Co. 74 54 ..... .....
Scripps Booth Co. 62 35 ..... .....
Smith Motor Truck Co. 6-1/8 4-1/2 ..... .....
Springfield Body Co. 55-1/2 51 ..... .....
Preferred 139 101 ..... .....
Standard Motor Co. 10-1/2 5-7/8 ..... .....
Stromberg Carburetor Co. 45-1/4 38 ..... .....
United Motors Co. 94 42-3/4 ..... .....

1909 1906
High Low High Low
Chalmers Motor Co. ..... ..... ..... .....
Chevrolet Motor Co. ..... ..... ..... .....
Emerson Motors Co. ..... ..... ..... .....
Falls Motor Co. ..... ..... ..... .....
Grant Motor Co. ..... ..... ..... .....
Hupp Motor Co. ..... ..... ..... .....
Imperial Carbon Chaser Co. ..... ..... ..... .....
Keystone Tire & Rubber Co. ..... ..... ..... .....
Preferred ..... ..... ..... .....
Mitchell Motor Co. ..... ..... ..... .....
National Auto Corporation ..... ..... ..... .....
Peerless Motor Co. ..... ..... ..... .....
Pierce Arrow Motor Co. ..... ..... ..... .....
Preferred ..... ..... ..... .....
Republic Motor Truck Co. ..... ..... ..... .....
Scripps Booth Co. ..... ..... ..... .....
Smith Motor Truck Co. ..... ..... ..... .....
Springfield Body Co. ..... ..... ..... .....
Preferred ..... ..... ..... .....
Standard Motor Co. ..... ..... ..... .....
Stromberg Carburetor Co. ..... ..... ..... .....
United Motors Co. ..... ..... ..... .....

1916 1912
High Low High Low
Studebaker ..... ..... 59-1/4 34
Preferred ..... ..... 104 94
U. S. Motors Co. ..... ..... 9 1/16
Preferred ..... ..... 30-1/2 3/4
Willys-Overland Co. 47-1/4 41 72 67-1/2
Preferred 106-3/8 104-1/2 101-1/2 99
Goodrich, B. F. Co. ..... ..... 86-1/2 70-1/2
Preferred ..... ..... 109-1/2 106-3/4
General Motors Co. ..... ..... ..... .....
Rubber Tire Co. ..... ..... ..... .....
Preferred ..... ..... ..... .....
Ajax Rubber Tire Co. 73-1/4 63 ..... .....
Alliance Rubber Tire Co. 5-3/4 5 ..... .....
Preferred 8-3/4 8-1/4 ..... .....
Electric Vehicle Co. ..... ..... ..... .....
Preferred ..... ..... ..... .....
American Motor Co. 65-1/2 60 ..... .....
Pope Mfg. Co. ..... ..... ..... .....
1st preferred ..... ..... ..... .....
2nd preferred ..... ..... ..... .....
Chandler Motors 94 79 ..... .....
Enger Motor Car Co. 8 7-3/8 ..... .....

1909 1906
High Low High Low
Studebaker ..... ..... ..... .....
Preferred ..... ..... ..... .....
U. S. Motors Co. ..... ..... ..... .....
Preferred ..... ..... ..... .....
Willys-Overland Co. ..... ..... ..... .....
Preferred ..... ..... ..... .....
Goodrich, B. F. Co. ..... ..... ..... .....
Preferred ..... ..... ..... .....
General Motors Co. 162-1/4 155 ..... .....
Rubber Tire Co. 4-1/2 3 5-5/8 2-1/8
Preferred 23 18 16 12
Ajax Rubber Tire Co. ..... ..... ..... .....
Alliance Rubber Tire Co. ..... ..... ..... .....
Preferred ..... ..... ..... .....
Electric Vehicle Co. ..... 18 13 .....
Preferred ..... 23 15 .....
American Motor Co. ..... ..... ..... .....
Pope Mfg. Co. ..... 6 4 .....
1st preferred ..... 74 69 .....
2nd preferred ..... 21 14-3/4.....
Chandler Motors ..... ..... ..... .....
Enger Motor Car Co. ..... ..... ..... .....

1916 1912
High Low High Low
Essex Motor Co. 5-1/8 3-7/8 ..... .....
Fisk Tire Co. 168 115 ..... .....
Fisher Body Corporation 42-1/2 35 ..... .....
Preferred 95-1/2 93 ..... .....
General Motors Co. 175 117 ..... .....
Preferred 100 88 ..... .....
Intereon Rubber Co. 19 10 ..... .....
Inter. Motors Co. 25 3 ..... .....
Preferred 45 17 ..... .....
Kelly-Springfield 299 280 ..... .....
Kelsey Wheel 61 53 ..... .....
Lee Tire 66 44 ..... .....
Met. Motors 3-3/4 2-3/4 ..... .....
Motor Products 87 56 ..... .....
Perlman Rim 162-1/2 111 ..... .....
Princess Motor Co. 1-1/8 1 ..... .....
Republic Motor Truck Co. pfd. 98 98 ..... .....
Saxon Motor Oar Co. 87 60 ..... .....
Stutz Motor Co. 78 53-3/8 ..... .....
Times Sq. Auto Sup. 41 28-1/2 ..... .....
Universal Motor 9-1/8 4 ..... .....
White Motor Co. 60 46 ..... .....

1909 1906
High Low High Low
Essex Motor Co. ..... ..... ..... .....
Fisk Tire Co. ..... ..... ..... .....
Fisher Body Corporation ..... ..... ..... .....
Preferred ..... ..... ..... .....
General Motors Co. ..... ..... ..... .....
Preferred ..... ..... ..... .....
Intereon Rubber Co. ..... ..... ..... .....
Inter. Motors Co. ..... ..... ..... .....
Preferred ..... ..... ..... .....
Kelly-Springfield ..... ..... ..... .....
Kelsey Wheel ..... ..... ..... .....
Lee Tire ..... ..... ..... .....
Met. Motors ..... ..... ..... .....
Motor Products ..... ..... ..... .....
Perlman Rim ..... ..... ..... .....
Princess Motor Co. ..... ..... ..... .....
Republic Motor Truck Co. pfd...... ..... ..... .....
Saxon Motor Oar Co. ..... ..... ..... .....
Stutz Motor Co. ..... ..... ..... .....
Times Sq. Auto Sup. ..... ..... ..... .....
Universal Motor ..... ..... ..... .....
White Motor Co. ..... ..... ..... .....

Par Stock —Number of Shares Traded in—
Name Value Outstanding 1916 1912 1909 1906
Ajax Rubber Co. $ 50 $10,000,000 107,950 ....... ....... .......
Chandler Motor Co. 100 7,000,000 291,640 ....... ....... .......
General Motors Co. 100 (C) 14,985,200 43,215 55,436 ....... .......
(P) 16,506,783 129,933 48,869 ....... .......
B. F. Goodrich Co. 100 (C) 60,000,000 604,055 65,169 ....... .......
(P) 27,300,000 25,444 15,525 ....... .......
Kelly-Springfield
Tire Co. 25 (C) 4,360,100 524,329 ....... ....... .......
(P) 3,593,000 5,335 ....... ....... .......
100 (2-P) 547,100 ....... ....... ....... .......
(shares)
Lee Tire
& Rubber Co. ... 100,000 477,025
Maxwell Motors 100 (C) 12,778,058 2,009,100
100 (P) 13,764,121 20,585
100 (2-P) 10,127,468 300,935
Saxon Motors Co. 100 6,000,000 17,920
(shares)
Stutz Motor Co. ... 73,301 116,900 ....... ....... .......
Studebaker Motor Co. 100 (C) 30,000,000 3,045,440 50,652 ....... .......
(P) 10,965,000 11,411 109,020 ....... .......
U. S. Rubber Co. 100 (C) 36,000,000 1,165,881 661,765 517,411 598,628
100 (P) 59,692,100 69,147 78,734 199,512 123,611
100 (2-P) 458,400 ....... 35,695 61,790 59,875
White Motor Co. 50 16,000,000 89,300 ....... ....... .......
Willys-Overland Co. 25 (C) 38,655,710 1,852,745 ....... ....... .......
(P) 15,000,000 9,530 ....... ....... .......
Rubber Goods
Mfg. Co. 100 .......... (C) 253 150 500
100 .......... (P) ....... ....... 625

CURB MARKET.

Some of the big fluctuations shown in the charts are accounted for by the abnormal irregularities of one or two giants of the industry, whose volume of trading produced a marked effect upon the totals traded in, and their average prices. Instances like United States Motors Company and B. F. Goodrich Company may be cited as examples. The accessory shares have seen a general rise since first traded in, in 1912.

_The following chart shows average price of automobile, automobile tire and automobile accessory manufacturing stocks traded in on the New York Curb for 1906-9-12-16:_

SECURITIES ON VARIOUS EXCHANGES IN OTHER CITIES AND DATA FOR 1916.

Securities traded in on various stock exchanges of other cities show very little activity or regularity.

Below is shown the trading in the great automobile center of the world.

DETROIT. 1916
High Low
Auto Body Co. 48-1/2 32
Chalmers Motor 255 90
Chevrolet 277 171-1/8
Continental Motors 42-1/8 7-1/2
Ford Motor Co. of Canada 415 275
General Motors 800 418
Preferred 127 112-1/2
Maxwell Motors 95-1/8 57-5/8
Packard Motor 260 160
Preferred 104-1/2 100-1/4
Paige-Detroit 57-1/8 32
Reo Motor 47-1/2 32-1/4
Reo Truck 45-1/4 23-3/8
Studebaker 161-1/8 120-7/8

Cleveland shows greatest activity in the tire stock on account of its proximity to the great rubber center of Akron, Ohio.

1916
High Low
Firestone Tire & Rubber Co. 1,700 740
Goodrich Co. 78-1/2 60-3/8
Goodyear Tire & Rubber Co. 402 198
Portage Rubber Co. 183-1/2 62-1/2
Republic Rubber Co. 145 128-1/2
Swinehart Tire & Rubber Co. 110 79
White Motor Co. 60 47-1/4

PRINCIPAL COMPANIES WHOSE SECURITIES ARE NOT GENERALLY TRADED IN.

Until the past two or three years, motor and motor accessory stocks were traded in but little on the open market. Even today, when these securities are traded in much more generally, there is a large number of companies whose stocks are very closely held and it requires some unusual occurrence to loosen them for trading on the open market.

A notable example of this is the Ford Motor Company. The Ford car is widely distributed, yet the two million dollar capital stock is almost entirely held by seven men. Another case is the H. H. Franklin Manufacturing Company, of Syracuse. This company has $1,800,000 outstanding capital stock which is held largely by Mr. H. H. Franklin.

Further, out of a total of 81 companies reported upon (including the two above mentioned) at least 16, or practically 20 per cent, fall into the “closely held” class. Among these companies are the following:

Apperson Brothers
Consolidated Car Co.
Dodge Brothers
Federal Motor Truck
Ford Motor Co.
Ford Motor Co. of Canada
H. H. Franklin Manufacturing Co.
Gramm Motor Truck Co.
Haynes Auto Co.
Kissel Motor Car Co.
Mitchell Lewis Motor Co.
Mutual Motors Co.
Pierce-Arrow Motor Car Co.
Republic Motor Truck Co.
Stearns Co.
Winton Co.

SOME LEADING EXAMPLES OF PRICES AND TERMS AND PROMOTION PLANS UPON WHICH SECURITIES WERE PUT OUT.

Perhaps one of the most notable examples of plans for flotation of securities was the 8 per cent cumulative convertible preferred stock of the Pierce-Arrow Motor Car Company, offered by prominent brokers in 1916. This stock must be redeemed at 125 up to the amount of cash paid on common stock in excess of $5.00 a share in any year. The preferred is convertible into common stock, share for share, at the holder’s option (preferred stock $10,000,000) earnings five times preferred dividends; the common shares are without par value (common 250,000 shares).

Among other issues by banking houses of New York and other cities may be mentioned in 1912, General Motors Company’s 6 per cent first lien sinking fund gold notes dated 1910, due 1915, $200,000,000 (since paid off); 1913 Chalmers Motor Company of Michigan, 7 per cent cumulative preferred stock (no bonds) $1,500,000, redeemable at $115 a share, earnings over 9-1/2 times preferred interest; company taken over by new company in 1916. January, 1916, Willys-Overland Company convertible 7 per cent cumulative preferred stock, redeemable at $110, interest 6-1/2 times earnings; November, 1916, Chalmers Motor Corporation of New York, shares at no par value, at $35 a share (264,000 shares), book value $29 a share, earnings, $5.40 a share; National Motor Car & Vehicle Company common shares at no par value (80,000 shares), no bonds, no preferred stock. Offered at $42.50 a share, earnings old company equal to 12-1/2 per cent on new stock.

Most motor companies started with a small capitalization and business, and to provide additional working capital, as their business expanded, issued preferred or common stock.

Most of the better grade issues were for preferred stock, usually carrying with it a proviso that it could be retired at will at a stated price, some as high as $125.

Very few companies in the motor field have any bonded debt. Some companies which incurred such indebtedness in the past have paid it off; for example, the General Motors Company, and the Pierce-Arrow Motor Car Company.

The issues of securities by established motor companies have, as a rule, shown large liquid assets, and earning capacity record, and have been of the same general class.

In the automobile accessory line many flotations were put out in 1916 and a few in 1917, among which were:

(a) Edmunds & Jones Corporation.
(b) Perlman Rim Corporation.
(c) Motor Products Corporation.
(d) Fischer Body Corporation.
(e) United Alloy Steel Corporation.
(f) Transue & Williams Steel Forging Co.

(a) Edmunds & Jones Corporation (manufacturers of automobile lamps). This corporation issued $1,000,000 worth of preferred 7 per cent cumulative stock (no bonds), redeemable at $120, earning over six times preferred dividends.

(b) A somewhat unusual plan was the Perlman Rim Corporation (manufacturers of demountable automobile rims) which issued 100,000 shares of stock of no par value, divided into two classes as follows:

Class “A,” having voting power.... 3,000 shares
Common, no par value or voting power 97,000 shares

The estimated earnings of this company for 1917 are $3,000,000. In addition the company has been allowed claims for infringements sustained by the courts, amounting to $2,000,000.

(c) The Motor Products Corporation issued 100,000 shares, divided as follows:

Class “A,” no par value, non voting .. 95,000 shares
Class “B,” no par value, voting ....... 5,000 shares

This corporation has taken over five companies manufacturing miscellaneous products, such as automobile radiators, windshields, etc. Their earnings for 1916 were $788,000.

(d) A more usual form is the $5,000,000 issue of 7 per cent cumulative preferred stock and 200,000 shares common stock, of the Fischer Body Corporation. It is not contemplated to pay a dividend on the common until the company has $1,000,000 surplus earnings. Its net profits for the year 1916 were $1,000,000 on a total volume of business amounting to $20,000,000. The preferred stock is redeemable at $120.

(e) The United Alloy Steel Corporation issued 525,000 shares without par value, of which 500,000 were used to acquire United Steel Company, manufacturing alloy steel parts for the automobile trade.

For expansion purposes to provide more adequate equipment to supply the increasing demand for its product, $4,000,000 additional cash capital was to be provided. The estimated net earnings for 1916 were about $7 a share on 500,000 shares.

(f) Transue & Williams Steel Forging Company issued 110,000 shares without par value. One hundred thousand shares and $750,000 cash was to be paid for company subscriptions at $45.50 a share. The net earnings for 7 months of 1916 were $648,026 or $12 a share.

SECURITY ISSUES OF TIRE COMPANIES.

Among the tire company stock issues a few leading examples may be cited.

The Firestone Tire & Rubber Company issued $5,000,000 of 6 per cent cumulative preferred stock. A sinking fund is provided to redeem this stock at $110, beginning 1921. There are no bonds, and the company is required to maintain at all times total net assets equal to 250 per cent and net quick assets equal to 150 per cent of the aggregate par value of this stock outstanding.

The earnings for 1916 were $4,482,554.52, or over seven times the dividend requirements on the total issue of preferred stock. This stock was sold at $107.

Another representative issue was that of the Fisk Rubber Company, which consisted of $5,000,000 of cumulative 7 per cent first preferred convertible stock. This is redeemable at $110 upon 60 days’ notice.

The earnings for the year ending August 31, 1916, were $1,992,043, or three times the dividend requirements. There are no bonds or other form of funded debt.

One of the few instances of an issue of bonds by a tire company is the issue of $60,000,000 of 5 per cent gold bonds by the United States Rubber Company. Of course, tires are only a part of this company’s output. The proceeds of the sale of these bonds are to be used to retire certain obligations of subsidiaries, to provide additional working capital, etc.

NEWER ENTRANTS INTO THE SECURITY MARKET.

While in the foregoing chapter are noted some of the securities of representative manufacturers attracting the most pronounced attention, there are several others on the border line, or that have not as yet “arrived,” and possibly may never do so.

There has, therefore, been so little activity in these securities, that examples of their flotations are negligible in this report.

Those most in the public eye are perhaps:

The Harroun Motors Corporation
The Emerson Motors Company, Inc.
The Ford Tractor Company, Inc., etc. etc.

SOME LEADING EXAMPLES OF APPRECIATION OR DEPRECIATION IN VALUE OF SUCH STOCKS SINCE THEY WERE PUT OUT.

An example of depreciation in automobile stocks of an exaggerated type was that of the United States Motor Company, a combination of the Maxwell-Briscoe, Columbia, Stoddard-Dayton, Brush, and Sampson Companies. With an issue of about $35,000,000 stock, New York Curb prices in 1912 for the common ranged from 9 down to 1/16 and for the preferred from 30-1/2 down to 3/4.

The properties of this company have since been taken over by the Maxwell Motors Companys, which issued the following securities:

$13,000,000 1st preferred
11,000,000 2nd preferred
13,000,000 common

The prices of these stocks have ranged as follows:

1914 1917
Common 3 47-1/2
1st preferred 22 64
2nd preferred 7 32

This instance gives an extreme example of the fluctuations possible in motor stocks in one year, in 1912 the market values reaching as high as 7,200 per cent of the value indicated at low. The re-organized company in less than five years showed a market value of possibly 38,000 per cent of the market value of the old company at its low, and 500 per cent of its value at its high.

These great increases in volume and values are what have made so many motor millionaires, and, conversely, have swept away some large fortunes.

Another instance is the stock of the Studebaker Corporation, which sold as low as 20 in 1914 and which now brings 102. Also the Kelly-Springfield Tire Company’s stock rose from 50 to 299, due to their great increase in business and consequent large earnings.

GENERAL COMPARISON.

The attached chart, showing the average high and low prices of representative groups of securities during 1916, may be used as a comparison of the average selling price of the motor group with that of railroads, industrials, and mining.

It will be seen that the greatest fluctuations occur in the mining, steel and iron stocks of the standard list, and that a similar fluctuation occurs in the tire and automobile stocks of the motor group.

This comparison would tend to show that the tire and motor stocks are still in the class which fluctuates considerably and therefore, except in special cases, are more or less speculative. In this light these figures and comparisons are very interesting and may be carefully considered from the investment standpoint.

_The following chart compares the average high and low prices of representative groups of stocks during 1916 with similar groups in the automobile field:_

PRESENT TREND OF VALUES.

After the great rise in prices, the trend of values of the securities of motor accessory and tire companies, during the first quarter of 1917, was generally downward. During the past two years a large number of such stocks have been put on the market (see table 1 and 3) and a great deal of speculation has taken place, with the result that the market seems overloaded at the high prices at which the public has bought these stocks. At the time of the market reaction at the end of 1916, under various influences, motor stocks suffered considerable losses.

A few prominent instances may be cited. Studebaker, which sold as high as 67 in 1916, sold down to 102. Chevrolet Motor, whose high mark in 1916 was 278, sold down to 120. United Motors, which sold at 95 in 1916, sold down to 42-3/4. Similar conditions obtain through most of the list.

Among tire companies a few instances will show the same general downward tendency.

Lee Tire & Rubber Company’s stock, which sold for 50-1/4 in 1915, is now selling around 23. Goodrich stock, which brought around 80 in 1915 and 1916, ranges between 51 and 58. The Kelly-Springfield Tire Company, which sold as high as 85-1/4 in 1916, now sells around 60.

During the year 1916, the range of high and of low of 25 leading railroad stocks traded in on the New York Exchange was between 76 and 85. Twenty-five leading industrials for the same period ranged between 90 and 113. The range of all the motor stocks traded in during this time was from 119 to 231; while that of the tire companies was from 45 to 76.

On the Curb, motor stocks in 1916 ranged from 39-3/4 to 57-3/4; tire stocks from 67 to 79; and accessories from 58 to 73, all of these figures representing average high and low of each class.

POSSIBLE FUTURE TREND IN AUTOMOBILE INDUSTRY AS A BASIS FOR THE FUTURE OUTLOOK FOR 1917 ON ITS SECURITIES.

As was stated in the opening introduction, economic conditions are perhaps the greatest factor to be considered in constructing any forecast for the operation of such an industry as that of the motor, motor accessory and tire group.

These economic conditions have mainly to do with:

(a) The increase of population, its effect reflected in increased registration, and automobile production.

(b) The uneven distribution of automobiles in the United States.

(a) Following is a chart which shows graphically the comparison between the growth of population, increased registration, and increased automobile production since 1911.

_The following chart shows the rate of growth of automobile production and registration compared with increase in population:_

This would indicate that, while the population is gaining slowly and consistently, the production of automobiles has taken a decided jump, and a natural inference is that, even with so remarkable an industry as the motor group, it is beginning to prove food for speculation as to whether or not manufacturers, at the present increasing ratio of production and distribution, will bring a more or less complete saturation of the public, able to buy and support pleasure automobiles.

Many conservative judges have figured that this may not come for some years, possible five or more. It may be that new conditions will arise to put that period further ahead, or indefinitely postpone it.

(b) In this connection, the following chart is of interest. This shows the ratio of voting men to each registered automobile in the United States by states.

_The following chart shows the ratio by states of men over 21 to each registered automobile:_

Attention is invited to the diverging range of distribution. Territorial and community economics account for this very largely. For example, an analysis of three sections will show a decided variation, say for New York (with one automobile for 15 voting men); Arkansas (with one automobile for every 54 voters); and Alabama (with one automobile for every 43 voters).

The state of New York is very largely industrial, and one might commonly infer that, due to the great wealth represented in this state, the ratio should be much smaller. States like Arkansas, Kansas and Iowa are distinctively rural sections—where the population is not so clustered as in cities like New York, and automobile transportation is more utilitarian than a luxury or pastime. For this reason it is estimated that practically every voter, almost, in Kansas and Iowa is a possible prospect in figuring future consumption.

Still another diversion notably exists in the ratio shown for the Southern states, and this is readily explained by reason of a paucity of buying power, since the majority population is negro.

To indicate how the various types of automobiles have been distributed in three different states, the following chart is included in this report.

_The following chart shows the distribution of leading motor cars in different states:_

The following factors may be instrumental in the automobile industry in preventing the reaching of an absolute saturation point:

(1) Increase in earning or buying power of those now unable to support an automobile;

(2) A very low average price;

(3) Production finally being held at the point where it keeps pace with the increase in population;

(4) Increase in the utilitarian need of the automobile.

In making up a quota for the possible consumption in the automobile industry, the following chart may be considered as a conservative basis to work on.

_The following chart shows the estimated automobile market for 1917:_

There being, therefore so many elements entering into the question of influence upon this group of securities, it is rather venturesome to presume any prediction for their future, for fear such prediction may prove unfounded, as have many former guesses on their probable rise and fall.

The immediate outlook for 1917 is at present somewhat baffling, aside from the economic tendencies, charted in this chapter, but there may be a change for improvement at any time in the motor car industry, especially if our government should place large orders for cars and supplies in the event of war, or the foreign trade should take on large quantities for the remainder of the year.

It must be remembered that the supply of parts for cars is now, and will be more and more, an extensive business of the motor car industry.

One prominent New York newspaper which censors very carefully its advertising is very cautious in handling offerings on motor stocks.

It might be safe to assume that motor stocks in well managed companies making popular cars will be as secure an investment for reasonable earnings on products as other industrials for some years to come and possibly indefinitely.

The future of automobile accessories is possibly not subject to fluctuations in the same degree, nor as apt to reach the saturation point as might be the development in the automobile industry, for the reason that with the increase in the number of cars in use, the purchase of many accessories will be made by car owners, even though the manufacturers should not continue to buy an increasing, or even equal, volume.

It is natural to expect that the earnings on and the price of automobile accessory stocks should therefore remain firm, if conditions of trade or competition do not unduly affect them.

The future of the tire industry and stocks seems reasonably secure, as unless some satisfactory substitutes for rubber tires are discovered, apparently an increasing number of tires for replacements, if not new cars, should be demanded each year.

The present earnings of the tire companies are very large and should continue favorable. It must be remembered that the cost of material and labor are as important considerations to this class of manufacturers as to all industrials, and that their undue rise in cost might affect the industry more or less temporarily. But as they have come to be classed as necessities, the prices would naturally adjust themselves to the cost of manufacture.

With all popular cars sold far in excess of their capacity, barring the interference or lack of transportation, labor friction, or other unexpected or disturbing elements, it is safe to assume that 1917 should be a record year in the motor, motor accessory and tire industries, and that their earnings should be reflected in the intrinsic and probably the market values of their securities.