Kaiser Speculation

The Kaiser-Frazer Corp. rolled merrily along last week. A second public offering of 1,800,000 shares of K-F stock (TIME, Jan. 21) was sold in less than an hour. Net proceeds: $34,470,000. K-F's first issue (1,700,000 shares) was offered for $10 a share last September. This time it brought in a spanking $20.25. But the road was getting bumpy.

Ohio banned sale of K-F's new issue because there was no earnings record to warrant the 100%-plus hike in the price. So did Michigan, which coldly stated that the stock could not meet its security regulations. Indiana ordered that the stock be sold only in zoo-share lots. Said Indiana Securities Commissioner Kenneth Weddle: "The stock definitely is a speculation so far. . . . Therefore we'll limit the sale to those who can afford to take the risk."

But such pessimistic talk was drowned out by the hullabaloo raised by the first public showing of the Kaiser and Frazer automobiles in Manhattan's Hotel Waldorf-Astoria (a simultaneous showing on the West Coast was called off because the two handmade models on display in Manhattan were the only ones the company had). Some 156,000 New Yorkers climbed five flights of stairs and stood in line to look at the shiny green and red models.

In four and a half days, K-F salesmen took more than 8,700 "orders" from enthusiastic customers who gave no deposits, " got no promises as to delivery dates or prices. But if Henry Kaiser stuck to his general price prognostication ($900 to $1,400) K-F had a backlog (if the orders held good) of approximately $11,000,000 from the New York City showing alone. Carried away by all this, Partner Joe Frazer chortled: "We have, I believe, become the fourth largest automobile company in America."

What this meant only Frazer knew. As far as production was concerned, skeptics jeered that K-F was a long way from being any kind of an auto company at all.

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