Reo Tussle

Ransom Eli Olds is the only man in the U. S. who has two automobiles named after him. As early as 1887 he made in his family's machine shop a steamer which he tested on the streets of Lansing, Mich. before dawn so that he would not annoy his horse-driving neighbors. Four years later he sold to a firm in India the first automobile ever to be exported from the U. S. By 1899 he was building the first factory in the U. S. designed solely for automobile production. In a few years the early curve-dash Oldsmobile runabout was the fastest selling car in the country (5,000 units annually) and "In My Merry Oldsmobile" was a smash song hit. But Mr. Olds had differed with his backers and retired, a millionaire at 40.

His retirement lasted only a few months. While inspecting some Michigan peat deposits in 1904, Mr. Olds received a wire from a group of his fellow businessmen in Lansing, offering him the management and control of a new automobile company using his initials for a name. R. E. Olds thus became the founding-president of Reo Motor Car Co. Olds Motor Works was later one of the original divisions of William Crapo Durant's General Motors, but Mr. Olds and Reo have been stoutly independent for 30 years. Last week the white-crested old motorman, who has been inactive for a decade, suddenly found himself in the midst of a scurrilous proxy fight.

Fortnight ago a group of stockholders ostensibly led by one W. S. Diamond who claimed he represented 100,000 shares of Reo stock, asked for proxies for the annual meeting this week. Mr. Diamond & friends pointed to operating losses of $10,000,000 in the past four years, depletion of working capital, curtailed sales. And they made much of the fact that 70% of Reo's cash had been tied up in a closed Michigan bank of which old Mr. Olds was chairman. Hugh R. Baker of American Bank Note, a large Reo stockholder, was so alarmed by the charges that he called on Mr. Diamond's attorneys. "A more evasive set of men I have never contacted," Stockholder Baker reported.

No one was very excited by the Diamond attack until Richard Hugh Scott, Reo's president, squared off against Chairman Olds. An oldtime Dry who used to insist that the return of 4% beer would make two idle for every one it employed, President Scott was Reo's general manager with dictatorial powers until last December. Mr. Scott's endorsement of the Diamond committee brought an angry blast from the Reo management: "We agree with the independent stockholders' committee that the results of operations of the company during the past few years have been unsatisfactory. For that very reason the board . . . voted to remove Mr. Scott from the position of general manager." As for the unfortunate Reo bank deposits, "the attempt to place the responsibility . . . on Mr. Olds is a flagrant disregard of the facts."

Mr. Olds, now 69 and once again Reo's active head since Mr. Scott was ousted, issued a personal statement: "There is no fight between Mr. Scott . . . and myself. . . . The only fight is to save Reo for its stockholders. Why doesn't Mr. Scott tell the stockholders what the real motive is behind his campaign? Only today I was told by one of Scott's group that he and Mr. Scott and family had optioned their Reo stock to June 1 and were hoping to actually sell this stock to the New York bunch, who constitute the so-called 'independent committee.' As far as I can learn they are men of no automobile experience, whose probable object is to vote themselves in control with salaries which might soon absorb all the assets."

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