Death Watch

On a wintry New England day last week, 1,231 workers began drawing their last paychecks from the Waltham Watch Co., in Waltham, Mass. Then the oldest watch company in the U.S. shut its doors. Waltham Trustee Daniel J. Lyne blurted an angry explanation. "The RFC," he said, "is . . . out to sell the firm down the river."

But if anyone had been sold down the river, it looked as if it was RFC--which was once again caught in a losing proposition. Although Waltham has a famous 100-year-old name, the company was reorganized five times, went into bankruptcy twice before it went broke again last year (TIME, Jan. 17, 1949) and called on RFC for help.

Following pressure from New England Congressmen and the recommendation of RFC's New England regional director, John J. Hagerty, RFC authorized a $6,000,000 loan for Waltham. Hagerty then left his $10,000 RFC job,, became Waltham's $30,000-a-year president -- and the company hopefully reopened. But its ancient equipment and shopworn trade reputation were no match for other U.S. watchmakers and such U.S. companies as Bulova, Benrus and Longines-Wittnauer, which import watch movements from Switzerland.

Waltham was soon short of cash again, chiefly because around $3,000,000 of RFC's loan went, in effect, to pay off old Waltham loans from four banks. (On their part, the banks had written off $1,000,000 in loans.) RFC earmarked another $2,000,000 for purchase of new machinery. Of the remaining money, all but $500,000 went to pay off Waltham's other debts and taxes. When Waltham tried to get more working capital by borrowing on the $2,000,000 machinery fund, RFC said no, and the company had no choice but to shut down. It looked as if RFC's fling at watchmaking had served no purpose but to bail out Waltham's creditors.

Prefabricated housing was still haunting RFC last week. Despite its disastrous experience with Lustron, where it poured a cool $37 million down a rathole (TIME, Sept. 12), RFC had lent about $2,400,000 to Reliance Homes of Lester, Pa. The money was' to be used to finance mass production of a low-cost, ribbed-aluminum, factory-built house. The three-bedroom house "package" came in seven sections, could be assembled on the site by a crane and five workmen (see cut) in 1 1/2 hours. But Reliance found that the house, boxlike though it was, cost around $10,000 when erected near a big city like Washington. After making only 134 houses in five months, Reliance closed down. Last week, like a merry uncle devoted to a profligate nephew, RFC reached for the pocketbook again. It lent Reliance another $665,000 to help it reopen.

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