Behn Marches On

The public had never heard of him and even among bankers and industrialists his name meant little when, suddenly in 1928, Sosthenes Behn became master of Mackay-Postal telegraph system. When editors cried for a picture of the new successor to the late romantic silver-mining telegraph tycoon John William Mackay, all they could get was a fusty photograph of a man with a beard. This they printed only to be told that Sosthenes Behn had removed his beard some years before. But soon the public learned a lot about Sosthenes Behn. . . .

In the brief years of Calvin Coolidge's presidency, Mr. Behn's International Telephone & Telegraph Corp., starting as an obscure Puerto-Rican adventure, had acquired most of the telephone business of South America, had obtained a complete monopoly in Spain from His Most Catholic Majesty Alfonso XIII, had rebuilt the telephones of Paris and Shanghai, had obtained the backing of J. P. Morgan & Co. With the acquisition of Mackay-Postal it became the second largest communication company in the world.* Last week Mr. Behn became a director of L. M. Ericsson Telephone Co., potent Swedish manufacturers of electrical equipment and operators of telephone systems in Sweden, Europe, Mexico, South America. And I. T. & T. increased its voting interest to 35% (virtual control) in the vast Ericsson enterprise whose assets approximate $200,000,000./-

Between the conquest of Mackay-Postal and last week's deal with Ericsson, lay four years of adversity. Bestriding the world, I. T. & T. was, in 1929, in excellent position to flounder and be lost in a violent world-wide storm. Interest charges on new capital seemed to be mounting faster than new profits. Revolutions and bloodshed in South America threatened not only I. T. & T.'s property but its contracts as well. The revolutionary government of Spain talked loudly of canceling the agreement which, five years before, had given I. T. & T. its first major boost to prominence and profits. The fall in the exchange value of Spanish and South American currency told heavily on net earnings. Telephone & telegraph traffic declined. In Europe rose a rangy, six-foot competitor, Theodore Gary and his General Telephone & Electric Corp., backed by Transamerica Corp., largest of branch bankers. At home, Mackay-Postal was bravely bucking the competition of Western Union but could show no profit. Mr. Behn, who had watched I. T. & T.'s profits climb in six years from $1,930,000 to $17,732,000, now saw them tumble to less than half that sum, and finally sink out of sight into the bog of a three-million-dollar deficit. Gone were the days when an excited public was eager to pay $149 for I. T. & T. stock earning $3 a share. The stock earned nothing, sold for as low as 2 5/8.

But if Wall Street whispered that I. T. & T. was licked, Wall Street did not know Sosthenes Behn. To his shrewd daring and persistent battling I. T. & T. owed its spectacular soar to success. He was now to prove himself a bad-weather pilot of extraordinary ability. He hacked expenses, pruned salaries, wrote down assets. With his able brother, Hernand, he worked furiously to increase the efficiency of Mackay-Postal, built five new radio stations on the Atlantic Coast alone. When the storm began to clear it was apparent that Sosthenes Behn had not only braced his towering electrical companies to stand it, but had actually increased the volume of his business. From across the sea came reports that in 1932 more Spanish, Mexican and South American senors had called up their black-eyed senoritas than at any time during the previous year. Even Shanghai Chinese were growing increasingly fond of the wired black devil. I. T. & T. finished the year with 4.4% more telephones than it had in 1931. Plainly Sosthenes Behn had a solid footing for his Ericsson deal. And last week came another evidence of I. T. & T.'s vitality: a new radiotelegraph circuit between San Francisco and China.

*Largest: A. T. & T. (see p. 37). Arthur Wilson Page, son of the late famed Ambassador Walter Hines Page, is vice president (in charge of public relations) and director of A. T. & T. Younger Brother Frank holds the identical position in I. T. & T.

/-l. T. & T. in 1931 contracted with the late Ivar Kreuger to purchase a "dominant interest" in Ericsson, made a down payment of $11,000,000, and received Ericsson stock of equivalent value. Then it asked for an audit. It was this audit, disclosing Kreuger's false statements, which wrote the final chapter in the Match King's career. Sosthenes Behn declared he would cancel the deal, asked for his money back. He has yet to see it. So he kept the Ericsson stock, which gave him a 20% voting interest. It was this block which, subject to the approval of the Swedish Government, was last week increased to 35%

This file is automatically generated by a robot program, so reader's discretion is required.