Money in Milk

In 1920 Thomas Henry McInnerney was doing a million-dollar-a-year icecream business in Chicago. Still Mr. McInnerney was not satisfied. He thought there might be more money in milk. Last year Mr. McInnerney's National Dairy Products Corp. made $9,338,000 on milk, cheese, butter & ice-cream sales of $290,000,000. Last week National Dairy announced a prospective $62,545,000 bond issue -- largest industrial registration since the Securities Act was passed in 1933. Mr. McInnerney's idea about milk had been well founded.

The bond issue will represent the refunding of existing debt. National Dairy has outstanding $65,839,000 of debentures due in 1948 with interest at 5 1/4%. The interest on this debt amounts to about $3,500,000 a year. The company plans to pay off these debentures by borrowing $7,000.000 from banks on a five-year loan with 2 1/2% interest and by selling $62,545,000 of new debentures, due in 1951, at 3 1/4% interest. By getting lower interest rates on his new indebtedness, canny Mr. McInnerney will make an immediate saving of about $1,000,000 a year in interest payments.

National Dairy's 1935 profit of $9,338,000 was nearly 50% greater than the $6,552,000 profit of 1934. The company made about 3 1/4-c- profit on each $1 of sales. Mr. McInnerney's report estimated that the total 1935 cash income of the U. S. farmer was $6,943,000,000, of which $1,249,000,000, or 18%, was received in return for milk. The farmer got about $135,000,000 more for his 1935 than for his 1934 milk. National Dairy's report was, on the whole, extremely cheerful but did notice that 1935 taxes came to $4,300,000 and that the Social Security Act would add $600,000 more in 1936. Mr. McInnerney approved social insurance, in principle, but felt that "existing legislation tends to penalize those businesses that maintain steady employment in favor of those that do not." The National Dairy payroll has never been more than 14% below its 1930 peak, and National Dairy employed 96% as many persons (35,146) in 1935 as in 1930. Thus Mr. McInnerney maintained, in effect, that his employees were already well insured against lost jobs.

At 68, Thomas Henry McInnerney remains active & undisputed head of National Dairy Products Corp. Born in Dubuque, Iowa, he studied pharmacy at the University of Illinois, during the World's Fair (1893) ran a drugstore at Chicago's 35th Street & Indiana Avenue. When the Fair closed, so did the drugstore. Mr. McInnerney went to Manhattan, became general manager of the late Siegel, Cooper & Co., large department store. In 1911 he was back in Chicago, with an interest in a coal company which also sold ice and had an ice-cream division. Mr. McInnerney traded his interest in coal and ice for control of the ice-cream part of the business, soon began thinking about consolidating the dairy-products industry.

In 1923 he sold the milk-consolidation idea to Waddill Catchings, then of Goldman, Sachs, with the result that the National Dairy family now includes more than 100 concerns operating in milk and other dairy products. Biggest units are Sheffield Farms Co., Inc., which delivers some 1,000,000 quarts of milk daily in New York City, and Kraft-Phenix Cheese Corp., which was selling about 40% of all U. S. cheese when Mr. McInnerney took it over in 1930. National Dairy has profited by a most unusual policy of acquiring only those companies which were earning as much per share as National Dairy itself, thus avoided the usual quota of "cats & dogs" which attach themselves to most consolidations.

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