Gruen Comeback

Benjamin Samuel Katz, who had been a newsboy and messenger boy before he became a photographer, went into Dinhofer Brothers, Manhattan jewelry wholesaler, one day in 1917 to buy a ring for his fiancee, Pearl. He pondered long over the selection, asked many questions, and finally left the store with a new job as well as the ring. Four years later Ben Katz knew enough about the jewelry business to organize his own firm, Katz & Ogush, which specialized in making stylish watchcases. He helped New York frame laws regulating the jewelry industry, and got to be known as one of the smartest men in the trade.

In 1935, when Cincinnati's old, famed Gruen Watch Co. found itself unable to pay $1,800,000 owed to banks, the banks asked Go-Getter Ben Katz if he could put the firm back on its feet. Substituting Gruen debentures and preferred stock for the bank loans, he thought he could do it in ten years. Last week he appeared to have done it with seven years to spare.

Gruen, noted for its slender, popular-priced watches, had done little business during Depression. It was run by two quiet, conservative brothers, Fred and George Gruen, sons of Founder Dietrich Gruen, who died in 1911 after making the first thin pocket watch by flattening out the movement. With a Swiss chalet-style factory called Time Hill in Cincinnati, and another in Biel, Switzerland, the Gruens operated along conservative lines, licensed one or two dealers to a city, clung to the prestige of their name regardless of profits.

Ben Katz changed all that. He hired a hustling young salesman named Teviah Sachs to sell more watches, and Sachs stirred up competition among the dealers.

Katz put a technical staff to work design ing new models and came out in 1935 with a curved wrist watch (''Curvex"), in which the movement was curved to fit the case.

Other new models with trick names began appearing twice a year, timed to hit the peak seasons of the watch business--De cember and June (graduation time).

In its first year under the Katz management Gruen made $606,000. Last year (ending March 31, 1938) net profit was $726,000. Having retired all the com pany's debentures with these profits, be sides $150,000 worth of Class A preferred stock, Ben Katz last week decided to pay off Gruen's remaining $839,000 of Class A and B preferred by issuing new common stock. With a 1938 sales record that equals last year's, and with the market in the mood for new financing, he hopes to sell 150,000 shares at a price that will get the funded debt out of the way and put new working capital in the till. President Katz expects his firm to resume paying dividends next year.

The Brothers Gruen are a little wide-eyed at the astonishing success of Benjamin Samuel Katz, who crosses the Atlantic six times a year, wears the latest Gruen wrist watch ("Ristside") and smokes cigars incessantly.

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