From Riches to Riches

When plump, suave Joseph Washington Frazer became board chairman of Graham-Paige Motors Corp. eight months ago, he agreed to work for $1-a-year as part of the deal. This was a good deal for Graham. It was a far better deal for Joe Frazer. Last week, he told why: it enabled him to run an investment of $500 into over $1,000,000 in a little more than a year.

Joe Frazer started his dizzy fiscal feat with the Warren City Tank & Boiler Co., Warren, Ohio (pop. 43,000). The company's $7,000.000 plant was built by the Navy but, under private management, was falling down on the job of making landing barges, etc. So Joe Frazer, fresh from doing a bang-up production job at Willys-Overland Motors Inc., took over.

He formed a new company. Warren City Manufacturing Co., capitalized it for $500 ( 5 (500 shares : par value $ 1 ) . Then he bought the assets of Warren City Tank & Boiler with part of a $4,000,000 Reconstruction Finance Corp. loan, 100% guaranteed by the Navy. He put in no money except $50,000 he lent the company.

Joe Frazer kept a controlling interest of 252 shares for himself and family, sold the rest to old business associates, including L. Boyd Hatch of Atlas Corp.

Then he upped Warren's production from $500,000 a month to almost $2,000,000.

About this time, Graham-Paige was casting about for a new chairman, and Joe Frazer made his $1-a-year salary deal, merged Warren City with Graham-Paige.

This meant that he turned over a five-year lease on the Navy's plant. Among the other assets: a $6,000,000 backlog of orders and the 500 shares of stock.

For this, Joe Frazer and associates got 150,000 shares of Graham stock. Market value at the time: $543.750 or $1,087.50 for every $1 share of Warren stock.

By last week, Graham stock hovered at 75. So Frazer and friends now have an investment in Graham of $1,068,750. Some $540.000 belongs to Joe Frazer and family. And if he decides to sell out, he pays not a skyhigh income tax, but only a moderate capital gains tax of 25%.

Before long, Joe Frazer intends to sit down with Graham's directors and decide on a salary for himself. Said he soberly last week: "After all, you can't expect a man to go on working for nothing."

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