A notable example of this is the Ford Motor Company. The Ford car is widely distributed, yet the two million dollar capital stock is almost entirely held by seven men. Another case is the H. H. Franklin Manufacturing Company, of Syracuse. This company has $1,800,000 outstanding capital stock which is held largely by Mr. H. H. Franklin.
Further, out of a total of 81 companies reported upon (including the two above mentioned) at least 16, or practically 20 per cent, fall into the “closely held” class. Among these companies are the following:
Apperson Brothers
Consolidated Car Co.
Dodge Brothers
Federal Motor Truck
Ford Motor Co.
Ford Motor Co. of Canada
H. H. Franklin Manufacturing Co.
Gramm Motor Truck Co.
Haynes Auto Co.
Kissel Motor Car Co.
Mitchell Lewis Motor Co.
Mutual Motors Co.
Pierce-Arrow Motor Car Co.
Republic Motor Truck Co.
Stearns Co.
Winton Co.
Some Leading Examples of Prices and Terms and Promotion Plans Upon Which Securities Were Put Out.
Perhaps one of the most notable examples of plans for flotation of securities was the 8 per cent cumulative convertible preferred stock of the Pierce-Arrow Motor Car Company, offered by prominent brokers in 1916. This stock must be redeemed at 125 up to the amount of cash paid on common stock in excess of $5.00 a share in any year. The preferred is convertible into common stock, share for share, at the holder’s option (preferred stock $10,000,000) earnings five times preferred dividends; the common shares are without par value (common 250,000 shares).
Among other issues by banking houses of New York and other cities may be mentioned in 1912, General Motors Company’s 6 per cent first lien sinking fund gold notes dated 1910, due 1915, $200,000,000 (since paid off); 1913 Chalmers Motor Company of Michigan, 7 per cent cumulative preferred stock (no bonds) $1,500,000, redeemable at $115 a share, earnings over 91⁄2 times preferred interest; company taken over by new company in 1916. January, 1916, Willys-Overland Company convertible 7 per cent cumulative preferred stock, redeemable at $110, interest 61⁄2 times earnings; November, 1916, Chalmers Motor Corporation of New York, shares at no par value, at $35 a share (264,000 shares), book value $29 a share, earnings, $5.40 a share; National Motor Car & Vehicle Company common shares at no par value (80,000 shares), no bonds, no preferred stock. Offered at $42.50 a share, earnings old company equal to 121⁄2 per cent on new stock.
Most motor companies started with a small capitalization and business, and to provide additional working capital, as their business expanded, issued preferred or common stock.
Most of the better grade issues were for preferred stock, usually carrying with it a proviso that it could be retired at will at a stated price, some as high as $125.
Very few companies in the motor field have any bonded debt. Some companies which incurred such indebtedness in the past have paid it off; for example, the General Motors Company, and the Pierce-Arrow Motor Car Company.
The issues of securities by established motor companies have, as a rule, shown large liquid assets, and earning capacity record, and have been of the same general class.