Clash

Goodyear Tire & Rubber Co. financial history was argued again last week because of the filing of a lawsuit to oust Clarence Dillon and John Sherwin from the supervisory control of this concern.

Thirty years ago the B. F. Goodrich Co. at Akron, Ohio, was already a great concern. It had made millionaires of its managers. Rubber might make millionaires of them, too, thought the boys of the neighborhood. Men, who were not too muddle-minded to think, acquired the same idea. A few of them did go into rubber -- Frank A. Seiberling, Harvey Samuel Firestone, Jacob Pfeiffer (Miller Rubber). Frank A. Seiberling began the Goodyear Tire & Rubber Co. in 1898 and built it into a great concern with plants propped among the hills and gullies of east Akron. He personified energy, a small, tightly knit man always amove. His workers grew fond of him, vice presidents to molders. He built them homes, loaned them money. He showed them how to be progressive. (He was one of the first men to make a transcontinental telephone call.) They liked and respected him. For one thing he kept himself and his family aloof from the secret scandals of before-the-War Akron. In 1920 he was financially smitten. Goodyear had $100,000,000 of stocks and like assets scattered around the world, but could not collect enough money to pay its own debts. So within a few months "the bankers," who had to protect their clients' investments in the company, forced Frank A. Seiberling out of his Goodyear Tire & Rubber Co., as one who had bungled its affairs. After a period of weary heart ache, he organized the Seiberling Rubber Co. Last week it completed a two-story $700,000 factory building which will increase its capacity 50%. Sales this year will exceed $12,000,000. Frank Seiberling has firm friends.

Goodyear's new management consisted of Owen D. Young, Clarence Dillon and John Sherwin (Chairman, Union Trust Co., Cleveland), whose duties were to see that the concern's obligations were paid. Dividends had ceased. Preferred stock had dropped on the market from $100 to $20, common stock from $132 to $5. Goodyear would have to pay dearly for new money. Yet the three managers brought in enough to keep the concern going, although they had to offer 8% debenture bonds, besides paying a large bonus. Dillon, Read & Co. sold the bonds, receiving a commission. Dillon, Read & Co. is accused, in the petition, of borrowing sums up to $7,000,000 from the reorganized company without proper authority.

The interests of the old stock and bond holders were made secondary by such financing. They have felt injured and have intermittently brought various lawsuits. This latest suit, filed at Akron, seeks to eject Clarence Dillon and John Sherwin from their supervision and to get back $15,000,000, wrongly diverted, according to the allegations, from Goodyear's assets. Owen D. Young is not named. Whatever may be the outcome of the suits, the fact is, the new management has made Goodyear once again a flourishing company.