New Spring for Waltham?

As a watchmaker, bearded Aaron Dennison was something of a genius. He invented an automatic cutter for watch wheels in 1833, and fathered mass production for the U.S. watch industry. As a businessman and founder of the famed Waltham Watch Co. of Waltham, Mass., his renown was of a different sort. His crazy ventures and his carelessness in letting his company go broke earned him the nickname, "Boston lunatic."

Though the company went on to become one of the biggest watchmakers

(Abraham Lincoln carried a Waltham), it often ran erratically, and almost failed after World War I. Boston's tough Frederic C. Dumaine, an old hand at finding gold in depleted tills,* bought control and resurrected Waltham. To make Waltham pay off, he dropped the designing department, and grudged every nickel spent on advertising, thus let the name be drowned out by younger companies. After cashing in on war contracts, Dumaine sold out in 1944 to Ira Guilden, ex-vice president of the Bulova Watch Co. and former brother-in-law of Watchmaker Arde Bulova.

Wound Down. Guilden junked Waltham's method of selling through jobbers, in favor of direct sales to dealers, which saddled it with heavy new selling costs (and caused disgruntled jobbers to knock Waltham). He also threw out such .sidelines as speedometers, and discontinued cheap watches, to concentrate on expensive timepieces. Furthermore, his plant--like many in New England--was old and inefficient; his workers had had their wages almost tripled in seven years (78% of the cost of a watch is in labor), without a rise in productivity to make up for it.

As costs rose, sales had been dropping. Moreover, during the war, when Waltham and other U.S. plants were on war contracts, Swiss watches had grabbed a large share of the market. And Competitors Bulova and Longines-Wittnauer could import Swiss movements from their foreign plants cheaper than Waltham could make them.

Wind Up? Things looked so bad for Waltham last spring that President Guild-en bowed out in favor of 42-year-old Paul P. Johnson, who had been hired as general manager. But Waltham needed more than new blood; it also needed new money, and it already owed Boston banks $4,000,000. Unable to get the cash, it went into receivership.

Two weeks ago Waltham laid off its 2,300 workers. Last week, Waltham appealed to the RFC for a $9,000,000 loan. Pressed by Massachusetts Congressmen, RFC loaned $350,000, with a promise of $650,000 more if the banks agreed. This first transfusion was only enough to reopen Waltham for a few weeks--and with a skeleton force. But President Johnson hoped that there would be more forthcoming, and that he could get Waltham ticking again.

*Most recently in the New York, New Haven & Hartford Railroad Co. (TIME, May 17).

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