One Hundredfold

OIL & GAS

Cackling as proudly as a hen just off the nest, Cities Service Co. last week took full-page advertisements in 175 U.S. newspapers. It pointed out that in 1949 it had boosted its sales to a record $582.5 million, making it one of the top ten U.S. oil companies and one of the four biggest U.S. suppliers of natural gas. The company, said its strapping (6 ft. 2 in., 200 lbs.) President W. (for William) Alton Jones, 59, was in the "strongest position in its history."

Not so many years ago Wall Street had written off Cities Service, the $1.2 billion hodgepodge of oil and utility companies put together by the late Henry L. Doherty. In a lusty expansion, Doherty had plunged the company $500 million into debt on the eve of the 1929 crash. By 1935, when the Holding Company Act threatened to break up the electrical utilities which formed the empire's backbone, Cities Service common stock had plummeted to 75-c- from the 1929 high of $68.

But Doherty's expansion had been wiser than Wall Street realized. He had sunk his borrowed millions into valuable operating properties, had foreseen the tremendous future of natural gas and invested heavily in it. And perhaps the wisest thing done by Doherty, who was bedridden for almost a decade before his death in 1939, was to put in "Pete" Jones to boss the company, and raise it from what seemed to be its ashes.

Jack of All Trades. Jones, born on a farm near Webb City, Mo., started at the bottom. At 21, he quit Vanderbilt University to take a $45-a-month job as "cashier, bookkeeper, janitor and meter repairman" for Doherty's Webb City & Carterville Gas Co. A self-taught wizard with figures, he moved up to auditor and treasurer of Doherty's electric company at Joplin, Mo. When he went to Manhattan that year for a company meeting, Jones's knowledge of budgeting so impressed Frank Frueauff, Doherty's partner, that Jones was made Frueauff's assistant. Less than two years later, Frueauff died, and Doherty gave 30-year-old Pete Jones the big job of helping him run things. When Doherty was stricken, Jones ran the company, although he did not become president until 1940.

Quick Recovery. Instead of wailing over the 1935 utility "death sentence," Jones saw it as a chance to sell the power companies for a profit and expand Cities Service's oil and gas operations. He plowed earnings back into paying off the mountain of debt, cut it in half. By World War II, his reputation was such that the U.S. grabbed him to boss the building of the $143 million Big and Little Inch pipelines. When the Government wanted an aviation gasoline refinery in a hurry, it lent Cities Service the money to build a $75 million one at Lake Charles, La. At war's end, Jones launched Cities Service on a $280 million expansion.

He reared a $42 million lubricating oil refinery beside the Lake Charles refinery, spent $21 million more on new oil and gas pipelines and plants, completed Cities Service's modern fleet of 22 tankers. To broaden his oil operations on the East Coast, which were 90% wholesale, he took long-term leases on Continental Oil's 1,600 filling stations. Though Cities Service's 1949 net, like the industry's, had dropped (at $55 million it was down $10 million), Jones boosted the company's earned surplus $70 million to a record high of $243.6 million. By last week, the company's stock sold for about $73. Anyone who had bought it at its 1935 low and held on to it could have made 100 times his investment.

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