Gold Dust & Best Foods

President George K. Morrow of the Gold Dust Corp. telephoned lawyers of John D. Rockefeller last week. Mr. Rockefeller and his friends owned 95,000 shares of American Linseed Co.'s preferred stock, and President Morrow wanted that preferred stock as a good beginning toward buying full control of American Linseed. Later he would deal with Laird, Bissell & Meeds (investment bankers) and others who owned American Linseed common stock.

American Linseed, organized in 1898, has been the leading U. S. manufacturer of linseed oil and its derivatives. Out of flaxseed, which it gets in the U. S., Canada, Argentine, India, it makes the oil essential for the manufacture of paints, varnishes, printers' inks, linoleum, oilcloth (American cloth) and like products. By-products are linseed oil cake, oil meal, poultry feed, cattle feed.

But flaxseed, like all agricultural produce, is a whimsical item. Sometimes there is want, and the price is dear. Irregular, therefore, has been American Linseed's business. In almost 30 full years it has paid a total of only $5.25 on its common stock, and not much more on its preferred. Flaxseed was the chief trouble.

Gold Dust had similar trouble with the cotton seed oil, feeds and other derivatives made by the American Cotton Oil Co. which it absorbed in 1923. The cotton oil business did not pay. Gold Dust abandoned it and pushed the sale of cleansers made by the American Cotton Oil's subsidiary, N. K. Fairbank Co. Those cleansers are Gold Dust, Fairy Soap, Sunny Monday Soap and like products. To them President Morrow late in 1925 added by purchase the shoe polishes of the F. F. Dalley Corp.--Shinola, Two-in-One, Bixby brands. Early this year he was negotiating to add Ball fruit jars and Crosse & Blackwell's good English jams, marmalades and other dainties. The Gold Dust Corp. stock is worth at current quotations, $29,464,300.

American Linseed has not tried to abandon flaxseed products. But ten years ago it began to develop a sideline. Just as American Cotton Oil (now Gold Dust) pushed its soaps, American Linseed began to make and push a line of foodstuffs--Nucoa Nut margarine, Best Foods mayonnaise, relish spreads, thousand island dressing, shortening, Bread & Butter pickle relish. On the Pacific Coast its Gold Medal mayonnaise is the favorite salad dressing. Of these food items American Linseed, said Chairman Robert H. Adams this spring, last year sold $17,000,000 worth. Last February the Atlantic & Pacific chain groceries alone sold 1,000,000 packages of Nucoa margarine. That explains to a great extent why American Linseed, despite the negligence of past dividends, was seriously considered worth $37,687,500.

All this the Gold Dust people have well known, plus the additional fact that John D. Rockefeller Jr. and his associates were inclined to sell their American Linseed stock. There were pourparlers and offers, so that last week Gold Dust's President George K. Morrow need merely put through a telephone call to the Rockefeller counsel. The talk was brief--a new corporation, Gold Dust American Corp., would be formed and for its stock the Rockefellers would exchange their American Linseed preferred stock. Minority preferred holders and the commonholders would have opportunity to trade their shares for the new company's stock. American Linseed (worth $37,687,500) plus Gold Dust (worth $29,464,300) together make a new approximately $67,000,000 organization.

When such mergers occur, the financing is usually the easiest part of the work. Much more difficult is whipping two sales organizations together. So difficult is this that some organizations keep original sales forces intact and separate. The Chrysler-(Dodge)-Dillon deal of last fortnight (TIME, June 11) is such a case. But with Gold Dust and American Linseed the problem is relatively simple. Both sell to the same grocers--cleansers and foods. Salesmen need add only a few loose leaves to their portfolios. But there are apt to be fewer salesmen than the two companies now separately employ.