TRADE: Pennies from Leaven

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Last week pretty Mrs. Jay ("Dolly") O'Brien, one of the holders of the women's hoard that is a 20% slice of outstanding U. S. corporation stocks, was in Palm Beach dancing with her socialite husband at the swanky Patio, walking with her bulge-clipped English poodle on her South Ocean Boulevard estate. Her amiable, globe-trotting son, Julius ("Junky") Fleischmann, whose father, Julius Fleischmann Sr., died (heart attack) on the polo field, was ailing in his moated castle in Cincinnati. And her onetime brother-in-law, husky Major (in the A. E. F.) Max C. Fleischmann was on his "Edgewood Ranch" in Santa Barbara, Calif., talking about big-game hunting and the Save-the-Redwoods League of which he is trustee.

But in spite of interests that have ranged from racing horses to backing ballets, the outdoorsy Fleischmann clan had something to worry about last week. For the descendants and in-laws of old Charles Fleischmann, who started a great industry in 1868 by peddling yeast in Cincinnati, are now the holders of close to 10% of the 12,648,108 outstanding common shares of huge Standard Brands Inc. And this No. 2 U. S. packaged food company (No. 1, General Foods) is not doing anything like as handsomely as the House of Morgan thought it would when it put it together around the Fleischmann Co. back in 1929.

Sign for all to see was the price of Standard Brands common, which hit 37⅜ in depression 1933, thumped down to its record low, 5⅜, last December and this week was hovering around 7. Broad explanation was that while Standard Brands net sales were holding up fairly well, the profit margin was growing narrower and narrower. In 1937, beating the bushes with such radio headliners as Rudy Vallée (for Fleischmann's Yeast and Royal Gelatin Desserts), wooden Charlie McCarthy (for Chase & Sanborn Dated Coffee), "One Man's Family" (for Tender Leaf Tea), Standard Brands ran up record net sales of $122,517,121. But even in briefly booming 1937, Standard Brands' net profit was only 73¢ a share compared with 1930's $1.22. And Mrs. O'Brien's dividend income (from 300,000 shares of common) had come down from $450,000 to $240,000.

For the likable O'Briens this was far from grinding penury but worse days lay ahead. Last year, with sales up 5% over 1938, net profits continued downward, wound up at 51¢ per share. Mrs. O'Brien's dividends were down to $135,000, 70% less than 1930, 55% less than 1933. For this Standard Brands could chiefly blame the fact that few U. S. citizens like the taste of yeast, no matter how many vitamins the Fleischmann brand contains. More than a decade ago, when the U. S. housewife had quit baking bread at home, Fleischmann's swank advertising agency, J. Walter Thompson, had an answer: yeast for health. By testimonials, by quotes from scientists, Standard Brands plugged yeast (three cakes a day) for pimples, constipation, that tired feeling. In rolled the money, for there is more profit percentage in a yeast-pat for an adolescent, than in a big yeast cake for a canny bakery man.