The Sharp-Pencil Men

In most U.S. corporations, the treasurer was long considered a pleasant fellow who signed the checks and knew the way to the bank. Few businessmen think of him that way today. The profit squeeze, the need to keep a company's money flowing, the ever more entangling intricacies of corporate financing--all have made the treasurer a powerful executive who is involved in everything from capital spending to cost cutting. The new corporate treasurer is a tough, sharp-pencil man, and his skills and duties have grown so wide that he often boasts the title of financial vice president and ranks just below the president in authority. So important have the financial men become that more and more of them find their way to the top corporate jobs--General Motors Chairman Frederic G. Donner, Chrysler President Lynn Townsend, General Electric President Gerald Phillippe.

No Idle Dollars. Company treasurers once did little more with their companies' cash than give it to banks to invest for their own profit (without interest for the firms) in return for a line of credit and checking-account services. Today they question whether a bank's services are worth such sizable deposits, and they look covetously at the interest income that banks make on them. As a result, most treasurers have pared their deposits and, in effect, become their own bankers. Their favorite investments are short-term U.S. Treasury bills and notes and municipal bonds, but the more daring also make loans to other companies and foreign banks. To win back company money, U.S. banks have had to issue their own form of short-term, interest-bearing notes called certificates of deposit. CDs are now bought and sold among treasurers with such frequency that they have practically become a corporate currency.

Today's treasurer dislikes letting even a dollar lie idle. If he raises $10 million for a new building that will go up at a rate of only $100,000 a week, for example, he invests all but what the building costs him as it goes up, earning interest on every dollar as long as he can. Some treasurers--such as those at Alcoa and Deere & Co.--have even set up their own sales financing subsidiaries to spur sales of their firm's products, and incidentally give them another profitable way to use its cash. "Every piece of asset--whatever it is--must be at work," says Union Oil Treasurer L. B. Houghton.

Bankers' Despair. Seeing the growth of their lucrative corporate deposits lag has naturally distressed bankers. To expand their earning power, many banks that served mainly industry have had to merge with more consumer-oriented banks to win personal savings accounts. They have also taken to smothering their corporate clients with helpful services, from figuring their payrolls to giving advice on foreign investments. But nothing wins over the flinty-eyed treasurer like a better interest rate. "It's fantastic what some of them will do for a one-hundredth of one percent pickup in interest," says a Los Angeles banker. Adds President Emmett Solomon of San Francisco's Crocker-Anglo Bank: "The corporate treasurer is in the driver's seat."

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