TEXAS ROLLS ITS OWN

Most of Texas' industries and rich resources (oil, sulfur, livestock, etc.) have been developed with capital from the East. Last week Texas showed signs of growing out of its financial swaddling clothes, standing on its own fiscal feet.

Dallas' Neiman-Marcus Co., one of the nation's swankiest department stores (hats up to $170, fur coats up to $25,000), needed $700,000 to retire a small 7% preferred-stock issue, pay for building additions, provide additional working capital. Its dark, professorial president, Herbert Marcus, could have borrowed the money from a Manhattan bank at 2 7/8% interest. Instead, Texas-minded Mr. Marcus decided to float a new 5% preferred-stock issue, let his store's customers and neighbors be its bankers. The new preferred was offered by local underwriters at $100.50 ($100 to common stockholders), of which Neiman-Marcus received $95. Annual cost of the money to Neiman-Marcus: 5.34%.

Texans gobbled up the issue. Most of the stock went to individuals (chiefly Neiman-Marcus customers), some to insurance companies, some to a Dallas hospital. Since Texas oil and ranch men have not been inclined to think in terms of securities in the past, some of the purchasers had never bought shares before, were so pleased they had them gift-wrapped to hang on Christmas trees as presents for wives or daughters.

At week's end it looked as if Neiman-Marcus had bought a lot of good will for the difference between 2.875% and 5.34%. Working on this theme, the store sent telegrams to its new stockholders. D. Gordon Rupe of Dallas Rupe & Son, one of the principal underwriters, once bought Mrs. Rupe sables in Chicago. To him the store wired: "Now that you have purchased our preferred, any furs you need for Christmas should be bought from Neiman-Marcus and not in Chicago."

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