Philadelphia Plan

Most splendiferous museum piece in Philadelphia's tradition-cluttered Independence Square is the twelve-story palace that houses 48-year-old Curtis Publishing Co. Most imposing thing about Curtis Publishing Co. is the combined circulation (8,406,431) of its publications: Saturday Evening Post, Ladies' Home Journal, Country Gentleman, Jack & Jill. Much less imposing are Curtis Publishing's dividends to its 18,961 stockholders (as of last Jan. 1).

Like most other U. S. businesses, Curtis Publishing hit its earnings zenith in 1929, when it reported a net of $21,534,265, an all-time high for any publishing enterprise. Holders of its 7% preferred (of which 722,714 of 900,000 shares are now held by the public) got their dividends as they had for years. Holders of its common got $8 in dividends, felt they had a fine investment in a stock which was selling at $132 before the October crash. But by the depth of the depression in 1932 the dividend on common had dropped to $1. Since then, no holder of the 1,732,366 shares outstanding has received a thin dime. In 1933 conservating Curtis Publishing had to cut its preferred dividend to nothing.

Except by comparison with its past records and its huge preferred dividend requirements, Curtis did not do badly in Depression or Recovery. But for 1938 Curtis was able to report a net of only $1,279,163, declared only $1.50 for the year on its preferred. For the first nine months of this year its net was $1,921,618.

By this time Curtis preferred stockholders had a thumping $12,339,273 coming to them in preferred dividends, and not even the sharp eyes of President Walter Deane Fuller could see the money in sight. Meanwhile the holders of the common, headed by the Bok family, descendants of the late great Curtis Founder Cyrus Herman Kotz-schmar Curtis (who own 836,626 shares), were becoming impatient.

Early last month Curtis Publishing Co. stockholders received a proposition. It was a Plan. Its proposals: Let holders of 7% preferred agree to exchange up to two-thirds of the total shares held for a $4.50 prior preferred; let the new shares have preference over the old in future dividends but no rights to accrued dividends. This arrangement would cut gross preferred dividend requirements from $6,300,000 to $4,800,000 and lop off two-thirds of the accrued dividend bill (saving well over $8,000,000).

Quick to cry "Watch!" were the preferred stockholders. Said a Wall Street brokerage house: "Preferred stockholders get nothing in return for their sacrifices; common stockholders make no sacrifices in return for their benefits." President G. W. Cox of Boston's John Hancock Mutual Life Insurance Co. did what no less potent stockholder could afford. He sent out far & wide among preferred stockholders, lined up opposition votes as far afield as the Midwest. Many another big insurance company, holder of Curtis preferred, girded for the war.

But the war did not start. Last week, in a paneled room off Independence Square, the directors of Curtis sat down before President Fuller to consider the Plan again. All, including brisk, slender Mary Curtis Bok and her ruddy-cheeked son, Gary Bok, agreed they wanted no Plan that might precipitate a stockholders' scrap. Curtis bankers sat down to figure out another Plan, were rumored to be planning sacrifices for the common holders to make up for the wounds that the preferred is bound to have to take.

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