Ericsson to I. T. & T.

In 1923 Col. Sosthenes (Greek for "life strength") Behn went to Spain where he saw an opportunity to make his International Telephone & Telegraph Corporation more international. In Madrid he encountered much excitement. Bidding against him for the Spanish telephone system were Ericsson Co. of Sweden and Siemens & Halske of Germany. Col. Behn cabled for a corps of U. S. engineers, accountants and typists, shut his troops in a hotel suite, sat up many a night writing newly modified contracts. After strenuous haggling that lasted nearly a year. Col. Behn obtained ex-King Alfonso's then valuable signature, and, consequently, a potent toehold on the Continent.

Less dramatic but equally momentous was I. T. & T.'s acquisition last week of a "dominant interest" in L. M. Ericsson Telephone Co. The purchase was made from Kreuger & Toll, Swedish match monopolists, bankers, and industrialists who have been dominant in Ericsson for only nine months (TIME, Sept. 15). Although Swedes must regret what amounts to the loss of one of their nation's greatest enterprises, the deal opens new and larger spheres to Herr Kreuger. His company received large amounts of I. T. & T. stock in return for Ericsson and is now thought to be the largest individual holder in the Behn Brothers' mighty sys tem. Immediately in line for the I. T. & T. directorate were both Herr Kreuger and his U. S. colleague, Frederic Winthrop Allen of Lee, Higginson & Co. Banker Kreuger will likewise become a member of International's executive committee. An artist in the world of finance, Herr Kreuger is especially versed in the subtle business of dealing with governments. He negotiates loans for them and in return gets rich concessions. Canny trader of the North, he is an ideal ally for the French-&-Danish blooded Behns in flinging their communication net over the world. And just as henceforth Kreuger & Toll's great banking resources will prob ably be available for the International system, Herr Kreuger will come closer to alliance with J. P. Morgan & Co. and Na tional City, bankers for International. In addition to acquiring the talent of Herr Kreuger, International receives properties of tremendous value. The I. T. & T. system will now consist of 1,000,000 telephones in 14 nations. It will have manufacturing units whose combined business will reach a total of $100,000,000 a year.* Just as it will give to Ericsson the right to use Bell's patents in foreign countries, it will receive the benefits of the Swedish concern's European research and patents. In the manufacturing field only large rival is Siemens & Halske of Germany, but last week an alliance with them was already rumored. The biggest telephone rival is General Telephone & Electric Corp. of the U. S. and Great Britain, affiliated with Transamerica. The cosmopolitan Behn Brothers were born on the tiny West Indian island of St. Thomas, Sosthenes in 1882, Hernand in 1880. Both were schooled in Corsica and Paris. Sosthenes, the more aggressive of the two, went to Manhattan at the start of the century, grew a beard to look older than he was, went into the foreign banking trade. In 1906 both brothers took over their stepfather's Porto Rican sugar plantation. When the Porto Rico Telephone Co. fell into the hands of a friend who had accepted it in payment of a bad debt, the Behn Brothers took it over, combined with it the Cuban telephone system a few years later. They have been accumulating telephone and telegraph systems the world over ever since./- I. T. & T.'s most noteworthy purchase in North America was the Mackay companies which included Postal Telegraph-Cable Co., bought in 1928. Col. Sosthenes, the more glamorous half of the Brothers Behn, acquired his title during the World War when he distinguished himself with the U. S. Signal Corps in France. An industrial Don Quixote, he specializes in daring enterprises. As chairman of I. T. & T. he has been able to do what he likes. Behn Brother Hernand is less bold, more intuitive. Their friends sometimes call them the "Balanced Behns."

* A. T. & T.'s total manufactures: $361,000,000.

/- Some tongue-twisting units of International Telephone & Telegraph Corp. are: Nippon Denki Kabushiki Kaisha, Tokyo, Japan; Oster-reichische Telephon-Fabrik Aktiengesellschaft, Vienna, Austria; Aktieselskabet Skandinaviske Kabel-og Gummifabriker, Oslo, Norway; Standard Villamossagi Reszveny Tarsasag, Budapest, Hungary; Societatea Anonima Romana de Tele-foane, Bucharest, Rumania.

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