North American Bows

An investment trust with $180,000,000 cash to play bank with was forecast last week when Harrison Williams' North American Co. bowed to the Holding Company Act death sentence, announced plans to sell out all its utility holdings and use the proceeds to go into the investment business. This will make far & away the largest pot of capital in the U.S. unregulated by anything except SEC's truth-insecurities and anti-manipulation acts. It will leave North American 18 times as much capital as potent Morgan Stanley & Co.

As President Edward L. Shea said in announcing North American's decision, the price it gets for its holdings will depend on how soon SEC makes him sell out, on what kind of market exists during this period, on how closely SEC regulates his liquidating sales. But there is no question that the company has plenty of value. It is the richest of the big utility systems. It is also one of the few with sizable earnings for its common stock ($1.92 a share in 1930). Its holdings (like Detroit Edison and Pacific Gas & Electric) are among the best in the U.S., should command a price of around twelve times North American's earnings. After the company pays off senior security holders, it hopes to have around $180,000,000 left.

In switching into an investment trust, North American is following the lead of Floyd Odium's Utilities Power & Light (now Ogden Corp.), which expects to have around $23,000,000 of liquid capital after disposing of its utility stock holdings, and United Corp., which expects to have about $14,000,000.

To stop New York workers from using their unemployment insurance for 13-week vacations, maternity leaves, etc., Governor Lehman last week signed a bill which forbids payments to workers who quit their jobs of their own free will.

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