Gillette Ratified

In all the world there are 800,000,000 males with shaveable beards. Only one-third of these are in the condition called "civilized." Hence a great majority of the world's male population is still a potential new market for razors. And in the U. S. alone every year, 400,000 youths gaze into a mirror and realize they have come of shaving age. For many a year Gillette Safety Razor Co., oldest in its field, has led all competitors in supplying existing markets, and in prying into new markets.

In South Boston last week some 200 persons gathered in the big Gillette recreation hall. They were owners of 242,000 Gillette shares, also held enough proxies so they had 1,545,000 votes out of Gillette's total 1,982,000 shares. By the overwhelming tally of 1,399,654 to 895 they approved Gillette's expensive acquisition of AutoStrop Safety Razor Co. (TIME, Oct. 27). Gillette thus retains the supremacy which AutoStrop's patents threatened. And gratifying to Gillette stockholders was the news that the New York Stock Exchange, reported displeased by the great publicity regarding Gillette's accounting, had consented to list the new stock to be issued in the transaction.

Although last week's vote assures consummation of the deal it does not remove two ugly thorns from Gillette's venerable hide. First of these thorns is the widespread knowledge that Gillette's reported profits for the past several years were not all real profits. Sales to foreign subsidiaries were billed at prices just under the U. S. market price, apparently for the purpose of letting the profit fall to the U. S. company at once to avoid high foreign income taxes. If all the razors and blades sold to subsidiaries had been resold to the foreign consumers at once, the profit would not have been overstated. Upon readjustment of the figures to a fully consolidated basis, accounts receivable shrank from $17,000,000 to $4,000,000 while inventories soared from $5,000,000 to $12,000,000. The total profits from 1925-29 under the old system were $69,500,000, an overstatement of $11,000,000. This sum was subtracted from Gillette's surplus, as was $4,600,000 used to develop the much advertised new razor and blade.

The second thorn concerns the act of Gillette directors in selling stock to the company at a price far in excess of the present market. A group of minority stockholders sued for damages because of this, threatened to restrain the merger until they were assured that approval of the deal does not waive the directors' liability. The directors claim that all but one have taken back the stock at the same price the company paid, that the single exception is King Camp Gillette, who last week was too ill to be approached on the subject.

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