Squibb Squib

In 1858 Dr. Edward R. Squibb, U. S. Navy surgeon, left the service and set up in a small way as a manufacturing chemist. It was just the right time. The Civil War, a big boom for medicaments, was only two years ahead. So the business went along prosperously, and at the age of 47 (in 1905) was incorporated as E. R. Squibb & Sons. Since then there has been another big boom for medicaments, the World War, which won the company not only profit but an award from the U. S. for distinguished service. That things have not been going backward since the war is shown by the fact that the company's net profits have steadily increased and more than doubled in the last four years.

In 1858 the ideas of employe profit-sharing and of inviting consumers to become stockholders were probably not familiar to Surgeon Squibb. There was nothing of that sort in the Navy, very little of it in business. Now that both these policies have become commonplaces, the successors of Surgeon Squibb have produced an idea that is more or less of a novelty in 1929. What they propose is to invite not employes* nor consumers, but retailers, to become both stockholders and profitsharers.

Several years ago Squibb (always a fairly close corporation) permitted a number of retailers to buy shares of participating preferred stock. The present plan goes much farther. From the retailer's standpoint it works in some such fashion as this:

If he has made annual purchases of $500 a year from Squibb he is allowed to buy ten shares (at $50 each) of the 6% cumulative Distributors Preferred stock of a new company, Squibb Plan, Inc. With each $50 he puts in, Squibb Plan buys a share of the parent company's common, now paying $1 a share in dividends/-. In addition Squibb Plan receives a sum from the parent company equal to 10% of the amount of the retailer's purchase of Squibb products and an additional 10% on the increase of his purchases over the previous year's.

Squibb Plan thus would have an income of $10 on the common stock it bought with the retailer's money. If the retailer's purchases come to $600 in the next year, Squibb Plan gets 10% ($60), and another 10% ($10) on the increase in the retailer's purchases. So all told Squibb Plan gets $80. Out of this it pays the retailer 6% ($30) on his money. Of the remaining profit ($50) half goes back to the parent company and the rest ($25) is prorated among the retailers in proportion to the amount of their direct purchases from Squibb.

If no more dividends are paid the retailer would still get his 6% and probably something besides from Squibb Plan. But either increase in dividends or increase in his Squibb purchases will add to the retailer's profit.

As an extra inducement to go into the plan, Squibb is offering to every retailer whose purchases average more than $100 a month for the 15 months ending Dec. 31, 1930, the opportunity to buy directly, at $50 a share, as many shares of Squibb common as he holds of Squibb Plan.

Surgeon Squibb did not live to see this new experiment. He sold his business some 25 years ago to the late Lowell M. Palmer, potent lime and cement man, who installed his son-in-law, Theodore Weicker, to run it. Later, Mr. Palmer's able son, Carleton H. Palmer, was installed at an early age and became, after the war and his father's death, president of the company. It was under his youthful stimulus that the business began advertising, expanding. Still young (38 years), clean-shaven (Squibb's shaving cream), smiling through white teeth (Squibb's tooth paste), healthy (Squibb specifics and much horse backing at Fairfield, Conn., where he is a master-of-hounds and keeps an airplane), President Palmer's policy has been to market standard and recognized medicines under their own names and advertise the Squibb as a trade-mark of quality, rather than to purvey medicines of unpublished ingredients with fancy names and irresponsible claims of merit.

The result has been that in the last eight years Squibb's net profit has multiplied seven times in spite of expenditures of $14,000,000 for research. Sales last year were over $13,000,000, net profit $1,368,300. Squibb customers number some 700 physicians' supply houses and wholesalers, 700 boards of health, 1,300 medical clinics, 5,000 hospitals, 27,000 retail druggists.

*Squibb also has a plan for installment stock purchases by employes.

/-Net in 1928 was $2.40 a share.