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History of Proctor-Silex, 1788 to 1972

By Arthur L. Redstone

PART III - PROCTOR & SCHWARTZ - 1922-1972

With the passing of Proctor and of C.W. Schwartz, plus the consolidation at 7th St., Walter Schwartz carried the full responsibility for the company's current and future operation. A better caretaker would be hard to imagine. His sheer span of years is impressive: sixty-one years with the company, fifty-four as an officer and thirty-six years as president. Walter neatly combined a fierce responsibility for the stockholders' equity with the welfare of his employees. Also he recognized that to long exist, development may not be throttled. He was satisfied with his delegation to Ayers and Kershaw in the dryer division, Allen in textiles and with the ability of the team of Hershey and Hauck in manufacturing.

In the field of dryer engineering and research, however, he felt the need of a major change. For this task, he nominated the man whom he had found so capable during his war service, A.G. Hurxthal who had come with the company in the dryer research in 1919. Hurxthal had a brilliant mind for innovation, but he also possessed the ability to select the most capable assistants. Once a task was delegated, he let the man alone, but backed him to the hilt. Where his predecessor accepted no advice, Hurxthal encouraged his people to think and act for themselves. This was in 1923, the same year that Hurxthal, acting entirely on his own, made his first thermostatic toaster.

One of Hurxthal's first developments emerged as the continuous filter-dryer tandem unit exhibited in the 1924 Chemical Show. The same year, the Proctor framed leather dryer replaced hand tacking on boards, saving labor and producing a bonus of ten per cent more permanent stretch in the saleable surface of the hides. In 1926, a new plywood veneer dryer appeared in time to capture the vast market of radio cabinets. Bogaty introduced tremendous increase in the drying power of our units, through the development of turbine fans replacing the old disc fans. The new stock and yarn dryers were neatly timed to the mass movement south of the textile industry, resulting in millions of dollars of Proctor and Schwartz (P&S) business. The New England mill operators just could not believe that southern help could successfully weave fine cloth, and by the time they woke up, it was too late. When giant Amaskeag folded, 750,000 spindles stopped and so did the workers that ran them.

In the twenties, the textile division concentrated on their garnett machine line with excellent results. We had the number one position in the country both for mattresses and automotive fibers. Simmons and Std. Cotton Products each had seventy-five of these continuous lines, which sold for $15,000 at that time. Tom Wilson, in Chicago developed both of these midwest accounts. The Philadelphia and Boston offices handled most of the woolen machinery.

When E.B. Ayers passed away in 1928, A.O. Hurxthal replaced him as vice president and board member. Huxthal maintained charge of R&D and included marketing of new products. Things were going great! In 1929, we shipped $3 1/2 million (twice in 1919) and netted fifteen per cent after taxes, including a quarter million dollars reserve; W.M. insisted that the boom would go on forever. Well, on October 26, 1929, Variety headlined, "Wall St. Laid an Egg." And WHAT an egg. The index dropped thirty-eight per cent in ten days. (Equal to 350 points in 1972.) The business decline that followed was uninterrupted for three and a half years to a seventy-seven per cent annual drop.

At the depression's bottom in early 1933, the shop force had been cut in half, and that half worked only three days a week. However, shop hourly rates were cut only ten per cent, unlike exempt employees who suffered fifty-six per cent cumulative reduction. A writer returned from his honeymoon to be greeted by a twenty per cent pay cut. W.M. Schwartz clearly stated company policy to the board, "It is our intention to meet any situation that may occur, and we will conduct the business so as to maintain a sound fiscal position. We cannot, however, afford to shut down our vital research programs." W.M. received no salary in the worst period, while the company contributed $200 a week to buy food and coal for laid off employees. If depression wages for a shop worker was only twelve dollars a week, he paid fifteen dollars for a suit, twenty-five cents for a haircut, and a dinner at a first class Italian restaurant, of a small antipasto, large plate of spaghetti, and ice cream, thirty-five cents.

By March of 1933, the depression had outrun itself and outsold itself. The concurrence of the new FDR Administration and the turn about may have been a coincidence but certainly his inaugural key note, "We have nothing to fear but fear itself," caught the popular fancy and the whole economy started back. Had anyone suggested that P&S business would be up 400 per cent in four years, his sanity would have been doubted. Management began restoring pay cuts at once, but it would be six years before the office pay scale reached the 1939 level and the officers' salaries were the last to be restored.

National Recovery Act (NRA) set up strict ceiling on wages, hours and prices. In an effort to spread work, it forbade overtime regardless of the special skill of the worker needed. NRA probably did spread employment, but it proved frustrating to work under and often defeated its main goal, of stimulating business. W.M. stated to the board, "We do out best to comply with these complicated rules, which are often conflicting, in the various industries we serve under. Since we frequently can't get clear ruling from the government, we just use our best judgment."

W.M. had been so right. Our business, after the depression, would rise to new heights, if we had the guts to continue our development. We emerged with three new items to stimulate recovery. The worsted mills, which now accelerated, after four years of idleness, greeted the new 461 worsted card as a short cut to increased production. Acetates, the hottest item in dressed fabric, could not be finished in any dryer other than Proctor's new multipass. This $20,000 unit sold by the scores. Greatly improved tobacco drying and ordering machinery had been developed in time to meet the boom of that business in 1936. Cigarette smoking would double with the advent of women smoking. The first daring ads depicted a man smoking, while a beautiful blond, applying lip stick resembling a cigarette murmurs, "Blow some my way!"

In 1933, Kay Schwartz (W.M. Schwartz' younger son) started in the shop, from which he very gradually moved through outside erection into engineering and into sales in 1938. During the war he was made vice president of the entire defense program and then he headed the post war reconversion planning organization. Finally, executive vice president in 1951 and president in 1954, a position he has held ever since. Kay believed that an executive's task should not be that of a technician solving operating problems, but rather as an executive making sure that the right people properly perform the right function.

Joseph Tiers Sr., the assistant treasurer and board member passed away in 1935. A brother-in-law of Walter Schwartz, he was impeccably dressed in a pin striped suit and bowler hat; he usually carried a cane. His carry-over of the 19th century respectability he accentuated by trimming his white hair in long front bangs. His son Charles replaced him on the board, and his grandson, Joseph Tiers III, is still active in Proctor Silex Sales.

Feeling keenly the competition from small low cost producers of rented housings, Fred Kershaw absorbed the management of the Buck Dryer Co. of Connecticut, primarily through Lou Buck, a peppery, capable sales engineer, and Bob Thygeson, his superintendent and crackerjack sheet metal man. Thygeson, through his knowledge of sheet metal and air movement rose through foreman, superintendent and plant management before his retirement thirty years later. The Buck unit, set up to operate as a separate vertical unit at B & Wyoming Sts., never really got off the ground as such. The transplant never really took because the sales and engineering activities were quickly absorbed into those functions of the parent company, under the excuse of standardization, limited capacity of the Buck group or skepticism of the young group's decisions. Thygeson's development activities continued until the war.

George O'Keefe, who had been in sales from 1920-1925, returned in 1937 as director of chemical dryer sales, from which he was promoted to vice president of all dryer sales and board member in 1946. George looked and acted just like the crack hockey player that he had been in college. Blessed with a Steven's degree, and a keen trigger mind, he never did anything slowly, not even losing his temper.

In 1939, Kay Schwartz and Ira J. Williams were elected to the board to sit with W.M. Schwartz Sr. and Jr., Kershaw, Allen, Hurxthal, Hershey, Ayeres, William Kurtz (Pa.), Joe Carpenter, J.S. Tiers, and Frank Schermerhorn. At that time the company absorbed Philadelphia Drying, Machinery Co., an active low price competitor since 1901. At that time, Walter Sibson Sr. and Tom Allsop both left PTM to start at Philadelphia Drying, Machinery Co. (PDM). Badly hurt and heavily borrowed during the depression, they accepted the Proctor offer, at a time when their president, Walter Sibson Jr. was hospitalized. From this merger P&S acquired a vital entree into defense contracting and the services of Walter Sibson Jr. and John Wilson. Having sold their Germantown property, the PDM group operated through mid-1941 in a leased plant at 24th and Walnut Sts.

Convinced of the need of expansion in both the Machinery and Appliance Divisions, the board approved a loan of $600,000 for the 120,000 square foot building at 3rd and Hunting Sts. This building, dedicated entirely to Proctor Electric, more than tripled their space. A combination of Thygeson's operation at B and Wyoming St. and part of the PDM ordinance division moved into Building 12. It seemed almost a repeat of 1916.

During the 1939-1940 period, before the allied situation in Europe became so critical, the government exercised a nominal control of critical materials which were diverted to British Lend Lease. The U.S. was beginning to be neutral, only in that they did not send troops. Then somewhat before Pearl Harbor, with the Nazis threatening to envelope all of Europe, strategic materials (chromium, stainless, ball bearing) became increasingly more difficult to procure without a military rating. At this rate non-military procurement became quite difficult. The company then established the post of Priority Director, for the double purpose of monitoring the company's operation to comply with the expanding maze of Priority Regulations, and also to establish contacts in Washington to assist our customers in securing priority ratings.

It was vital to us that our customers acquire these ratings so that we, in turn, could extend them to our suppliers. Al Redstone, with twenty years experience in R&D, was assigned this task, reporting directly to Mr. Kershaw as president. In the beginning there was reluctance by some of the oldtimers in the company to comply with some of the very annoying requirements of the priority regulations. W.M. Schwartz stepped in immediately, called top supervisors and the priority director into his office where he clearly announced that company policy called for obedience with government regulations. No more resistance! This was leadership.

December 7- Pearl Harbor! Now complete government control of critical materials and labor by War Production Board (WPB). No more appliances! No more hosiery or tobacco dryers! One criterion only, "Does it help the war effort?" This meant a complete shutdown of appliances and contraction in broad areas of machinery business. Kay Schwartz's war effort team, consisting of John Powischill, Whitehead and Jack Wilson, spent the early period of the war at 3rd St. Fortunately, for the first half of the war, the defense needs of our regular line for aircraft plywood, chemicals and explosives, synthetic rubber, etc. accelerated at a great rate. Along with these equipment programs, we had direct war contracts for rudder shafts, tank parts and carburetor air scoops totalling only fifteen per cent of our entire production. In September of 1942, the company received the largest order in our history, even up to date from the Rubber Reserve Corporation of the RFC. They ordered forty-six huge three conveyor synthetic rubber dryers, 3500 tons of machinery, 200 carloads, shipped over a two year period. At present prices, the order represented over $8 million. All the equipment on this contract received top priority since Japan controlled practically all the natural rubber in the East, and without synthetic rubber our armies just would not roll.

By 1943, the WPB rules that, with few exceptions, the production facilities were adequate and that critical materials would be allocated only to those things that would "shoot, float or fly." From that time on, direct war items pre-empted our schedules, primarily the huge nose of the C-46 cargo plane. Each nose would have filled an average living room. Inspection and manpower problems were massive, but the award to P&S of the coveted Army E proved that our efforts were successful. The company, throughout the war, forwarded to every employee in the service ten per cent of his monthly pay.

The complete allocation of all critical materials (steel, aluminium, bearings, heaters) had to be frightfully complex. Every pound of steel, every bearing, etc. were first allocated to seven major agencies (Army, Navy, Agriculture, etc.) then re-allocated by those groups to major industry groups in WPB, such as textile machinery. Their pie, in turn, was cut among the various companies under their jurisdiction in proportion to the priority ratings of their scheduled shipments. Since WP had not set up a drying machinery program, we had to explode our requirements into twelve distinct programs: chemical machinery, textile machinery, rubber, plywood, etc. We kept a group of six accountants busy exploding our individual order requirements into steel bar sheet, plate, motors heaters, etc. and then re-assembling each of these 120 items back into the total of each WPB classification unit.

The company returned to government agencies over $400,000 in excess profit considered by the government audit taking volume into consideration and figuring normal profit on the return on investment. By this token, with shipments at 180 per cent of normal, our profits were above normal.

By November of 1944, the end of the war in Europe seemed imminent, so priority restrictions were lessened, but the sharp setback at the "Battle of the Bulge" evaporated all the optimism and recranked the "war machine," "Top side" feared that the Germans might try to repeat and victory in Japan would be very costly in men and materials. No one, other than a tiny few, not even Vice President Truman, had the faintest idea of an atom bomb. Many of us close to WPB knew of the gigantic Manhattan Project, but all we knew of it was that it had tip-top priority and that it was not in Manhattan. Just as Pearl Harbor started the war suddenly, with the U.S. unprepared, the atom bomb ended it, with the U.S. overprepared.

August, 1945 found our factory, our order board and our purchase backlog loaded with things that nobody wanted. The organization to clear the deck and manage post war expansion was headed by W.M. Schwartz as board chairman and T.W. Allen, back from the Electric Co., as president. George O'Keefe headed dryer sales, with John Senior as his counterpart in textile machinery sales. Chief engineers of dryer and textile, Bur and Riehl headed up drastically enlarged and relatively inexperienced engineering staff. Walter Corson replaced Schermerhorn as treasurer.

An appeal for price relief to cover added cost received no consideration from OPA whose yardstick was based on a comparison of current corporate profit with the average pre-war years. Unfortunately in those years, our overall profits were severely depressed by the figures from the Electric Division. We were informed that if the Machinery and Electric Companies were now separated corporations, and if separate 1937-1939 figures were available, the Machinery Division Corporation could be referenced to its own higher profit. The Proctor Electric then could make their own appeal and, if a base period loss was shown, they would still be granted a price plan to yield six per cent on investment. Shortly after this, Proctor Electric did incorporate separately.

In 1944, without considering the consequences, we opened a Victory list of non-priority orders to be given first sequence whenever civilian orders could be legally processed. This was a mistake! First of all, since these orders could not possibly be specific as to price, delivery and machine detail, they all required re-entering. More important, no one ever dreamed that the list would be so huge. It was a buyer's panic, and our employees clamored for their machines to fill their backlog. For consumers were short of cars, appliances, nylons, everything. Producers of staples (tobacco, soap, textiles) had been starving for new machinery for four long years. Customers who placed these orders from 1944-1946 certainly expected a reasonably long delivery, perhaps six months. How could any of us predict that by the middle of 1946 we would have a two year backlog. We, too, were short of everything: floor space, production material, tools, desks but most of all just people.

We supplied the floor space by the construction of a second floor 200,000 square foot addition to 6th St. To crack material shortages, we placed firm orders for millions of dollars of critical items on a twenty to twenty-four months lead, for sales orders, seventy per cent of which were not out of engineering. We lived dangerously! Manufacturing doubled in personnel and quadrupled in complexity. All in the shop, including twenty-six foremen on two and a half shifts, reported through Bill Hauck to Walter Sibson. In the planning, sixty in routing and expediting were under Whitehead, while Redstone in scheduling and material control had forty-six. The Methods Group, not then in the planning room, reported through John Powischill to Kay Schwartz and vice president. Rhein Wildboltz supervised the most ambitious standards program, since the Taylor System forty years before. The installation expense ran about a quarter million dollars a year, less than the Taylor System.

Under the OPA ceiling price, our principal sheet steel supplier, Apollo, simply could not produce profitably, and we could not legally pay them more, even though we would have been happy to do so. A legal solution was provided when Apollo's twenty largest customers leased the entire mill, and then allocated tonnage in proportion to the contribution of each partner. The cost of steel was more, but of course it was worth it to P&S.

In 1947, we reached our first million dollar month and shipment on the way up crossed incoming orders on the way down. The backlog of $20 million was unbelievable: 240 cards and garnetts ($20,000 each) and 110 soap, tobacco and veneer dyers ($50,000 each). At this point the liquidation of the backlog received a very nasty assist-cancellations! They rose at an alarming rate to $500,000. Between reduced sales and cancellations, our backlog melted $11,000,000 to $4,000,000 within a year.

Several important changes occurred in 1949:

1. Harmon Riehl promoted to vice president in charge of the textile division.
2. Myron Fleming filled in as head of dryer sales during O'Keefe's terminal illness. Starting with P&S in 1934, after a fine record at Drexel, Myron rose through engineering and sales; in the army he reached the rank of Lt. Col. of Artillery. At O'Keefe's death, Myron was promoted to vice president and board member.
3. Simultaneous with Myron's promotion, Kay Schwartz was elevated to executive vice president.

At P&S they had long learned to be too skeptical of any "odd ball" proposal, but when the Norwegian Fisheries Committee inquired about a whale dryer, the credulity gap really was tested. It was no joke! After suitable tests, contracts were signed for a $65,000 dryer for whale meat. The dryer was firmly anchored to the hold of a 35,000 ton whaling mother ship, which was expected to bring in the processed products of 1,000 whales from each voyage.

The Korean War and accompanying boom created a major resurgence in business. Once more the wheel turned and overtime, shortages, late shipments and high profits replaced short time, layoffs, excess inventory and losses. Both situations created problems, but the first is much preferred. The 1951 ended fabulously with a net before taxes of sixteen per cent on shipments and thirty-four per cent on net worth. Priorities and price control returned for a year but in a very mild form.

1953 marked the retirement of many of the "Old Guard." Phil Bur as dryer chief engineer was replaced by Jack Wilson. Bill Hauck and Harry MacEachern were replaced by Al DiFelice. A.O. Hurxthal replaced by Myron Fleming as executive vice president. T.W. Allen retired as president, followed by P. Kay Schwartz. With these five men, a cumulative 225 years of service was released. Mr. Allen's closing remarks to the board deserve a quote, "I am convinced that no company can long survive by conserving its assets and refusing to commit itself to venture. To maintain our business standards, or even to continue in existence, we must build a capacity for competitive aggression." So far as we know, this is an original statement.

In 1953, the company entered spray drying, starting with Proctor sales and engineering, but with sub-contracting as the actual manufacture. This move opened up new fields of coffee, clays and unfiltered slurrys. These units stood as tall as a twelve story building and sold for up to a half million dollars each. Since no one in the Proctor organization had any real know-how in this field, William Clelland was retained. In the twenty years since then, this unit has followed a highly volatile pattern of sales volume and profit/loss results.

As a long range means of improving operations through better cooperation and understanding at supervisory level, a Management Advisory Committee was established by top management. A group of fifteen elected by the exempt personnel (sales and administrative) met monthly to discuss examples of ineffective operation. The committee made comprehensive reports to top management regularly over a three year period. The committee accomplished little however, because, as the name implies, its function was advisory and they had no authority to execute their recommendations or even to force top management to heed them.

Kay Schwartz, as president, made 1954 a year of study, after which he reorganized the company to operate along functional lines (manufacturing, sales and engineering) rather than on a divisional basis. The new plan prevented duplication of services to individual areas and companies and also provided for stronger men at the top of each function. However, it weakened product specialization and the line of control from sales and estimating through to final cost and shipment. Powischill, chief engineer, delegated textiles to Ed Hyde and dryer to Geibel and Armaiz. Sibson, vice president of manufacturing, set up A. Difelice in charge of all direct manufacturing departments, methods and standards to Johnson and scheduling and inventory control to Redstone.

In 1955, P&S, anxious to expand its base, developed a line of steel shelving with Low Bianchi from methods in charge of manufacturing and Joe Finnerty, a robust sales type with contacts in food industry, to head sales. Operated vertically as a separate unit, shelving reported directly to the executive vice president. They reached the original goal of a million dollars a year in three years, instead of one and, as usual, they had to agree to meet A&P price limits, practically eliminating profit on a third of sales.

The company, recognizing the need for expansion abroad, detached Walter Sibson from manufacturing vice president to tour Europe for the purpose of acquiring a European subsidiary. After a search, he latched on to John Dalglish and Sons, makers of cloth finishing dryers since 1872. The firm had grown steadily to shipments of a million dollars a year, but in 1954-1955 they experienced several very poor years. Though makers of quality machinery, well accepted in the trade, they urgently needed the funds and the know-how to expand into other drying machinery. Recognizing the potential and confident of John Dalglish III's ability to manage it, Sibson closed a deal for eighty per cent of the J. Dalglish shares for 7,000 shares of P&S stock, bok value $230,000. (The first two years after the purchase, in rebuilding sales/engineering effectiveness and in retooling to fit P&S experience) After grafting P&S experience and credit onto Dalglish's knowledge and reputation, the loss picture began to dissolve as new product lines appears. Assisted greatly by the success of the Proctor synthetic rubber dryer in the Soviet Union, the return on our investment in Dalglish reached unbelievable figures. Contrasted to $900,000 shipments and $30,000 net profits, the thirteen years from 1958 through 1970 averaged $4,200,000 in shipments and $300,000 net after taxes. More than 100 per cent annual return on investment.

For years, a minor portion of the shop had agitated for a union, but with a mean seniority of eighteen years, the majority of the workers favored status quo, and had voted down each union attempt. However, as the younger employees began to predominate the union gained control. The company, which had been legally neutral, but honestly cool to unionization, became receptive when the sales of shelving to A&P began to drop with no union certification. So, in 1955 the employees voted acceptance of the United Steel Workers. Operations under this union have been quite acceptable with neither a strike or a walk out.

The retirement and/or death of most of the oldtimers occurred in 1956-1957. Charles Tiers retired from sales and from the board (the latter position replaced by Winthrop Sargent). F.E. Schermerhorn left after fifty-four years, his secretaryship filled by Corson. R.O. Keiser and Warren Dickinson in dryer sales and Senior and Wilson in textile retired but only Wilson was replaced. Lyn Cristensen took over the Chicago office. In 1958, Harmon Riehl retired as sales vice president. Finally Walter Schwartz Sr. retired as board chairman and then passed away on December 19, 1958.

The company's sales in the food industry jumped in 1959 due to improved designs and big promotion campaigns by Kellog, General Foods and Ralston. Orders approaching a million dollars each were received. The general acceptance of dried dog food had much to do with the rapid expansion within the industry. A new program of dehydrated onions, peppers and potatoes also boosted food dryer sales. It was said that in 1971, the state of Idaho shipped out more potatoes in packages.

The garnett line, backbone of textile sales, had started out as a breader for waste, then graduated to batt making for the mattress and upholstery trade. It now entered the third generation as the primary unit in the non-woven line of impregnated batts for linings, insulation, sound proofing and molded shapes. This garnett, called a duoform, automatically bonded fiber and plastic into a resistant workable bonded product, which is finding hundreds of applications.

In the early 1950s, the company bought the Redman Process patents for the preshrinking of fabrics, mostly tubular knit goods. Considerable time and money had been spent to develop and market this machine which exacted a royalty on every yard produced by this unit. We shortly ran into massive litigation of our right to market and license the process. This litigation of suits and counter suits, spearheaded by Jack Wilson, lasted for five years until the South Carolina Appellate Court finally decided in P&S favor. Finally, an agreement reached between Tubetex and Proctor provided that P&S, in return for a million dollar cash settlement, would withdraw from the business and release the patents. Deducting all development and litigation expense, we credited 1961 operation with a clear profit of $500,000.

Kay Schwartz took very ill in June 1959 and W.M. Schwartz Jr. acted as president during his illness. During this period, Myron Fleming resigned as executive vic president and J.R. Johnson was promoted to vice president of manufacturing and John Powischill as vice president of engineering. Walt Sibson, who had left the company for a short time, returned as vice president of sales. 1959 saw a tremendous upturn of our business, both in machinery and in appliances. Facing a severe space bottleneck, the machinery division secured seven acres in Lexington, N.C., on which they built a 75,000 square foot, half a million dollar plant. It was first planned to make only conveyor dryers and to produce cylinder clothing for southern mills. Later, the clothing operation phased out, but the dryer operation expanded to cover most of the dryer line. The starting pay in Lexington averaged one dollar and ten cents per hour, compared to two dollars and seventy cents in Philadelphia. The company knew that this ratio would never be maintained but twelve years later, there still would be a 1.4 differential, with almost identical personnel efficiency in the two plants. We were, however, badly wrong in estimating the length of the learning cycle which required five years to reach ninety per cent effectiveness.

A number of steps had been taken in the shelving division to improve manufacturing performance and stimulate sales. Bob Engel, plant engineer, spent the major part of his time developing labor saving tooling. Ford Sebastion from Silex developed new sales procedures and was then promoted to divisional head. Finnerty left and, after a year, Sebastian followed him. For a time, the division reported directly to J.R. Johnson, but after several years of continually unprofitable performance, the entire division was liquidated in 1964.

Early in 1960, the stockholders of Proctor Electric, P&S and the Silex Corporation voted for a merger, in which each share of P&S received eight shares of Silex stock. In order for this consolidation to be considered a merger, all P&S shares were sold to Proctor Electric so that the child/parent relationship reversed, but exactly the same people remained the owners. The ratio in size of the two companies was more like 5:1 than 8:1 but the Silex group delivered a $1800,000 tax carry forward, not indicated in net worth. In a very brief time, the sales value of a share of P&S stock accrued by 550 per cent.

As Walt Corson, treasurer, went to Proctor Silex, fiscal supervision of P&S passed onto Elliott Lukens, controller. Lukens, a CPA and a capable accountant, lacked the aggressiveness to enforce his fiscal control over resistant department heads who stubbornly insisted in following procedures which most suited them. Finally the board replaced the controller with Howard Horn as treasurer. Horn, the opposite of Elliott, was a super-tough auditor type, who suspected everyone. If Horn had any faults, permissiveness certainly was not one of them.

The Lexington operation improved steadily. Fred Bickel proved knowledgeable and very strong, the only plant manager since its inception. Not only did plant and personnel effectiveness rise, but expanding volume steadily reduced the overhead ratio of sales shipments. The personnel training programs, while very worthwhile, were often frustrating when an expensive training program developed skills so saleable that the trainee simply moved to another company at more money. Just as frustrating were management's efforts to encourage Philadelphia foremen to go to Lexington. They did go down, but on a temporary basis. Today, Lexington has but one foreman trained in Philadelphia.

Elderly Philadelphia capitalist, Winthrop Sargent, who followed W.M. Schwartz as chairman, left the merger and Tom Neelands, former Silex financial chief, took over as head of the P&S board. A genius for sophisticated financial operation, Neelands never involved himself too deeply in the various functions of the business except, of course, that of accounting. It was Neelands who, with Walter Schwartz Jr., was most responsible for the merger. Dick Johnson, promoted to executive vice president, relieved himself of all manufacturing detail and Al DiFelice assumed complete charge of production everywhere. Bickel, supervisor, and Ray Cain in Philadelphia both reported to DiFelice.

1964-1965 were excellent years for P&S with consolidated sales topping $20 million. Dalglish performed beautifully, particularly with their "iron curtain" sales of synthetic rubber dryer with annual net profits of 33 per cent on our 1956 investment. At this time, John Dalglish retired to enjoy life as a gentleman farmer on his lovely estate at Crieff in Perthshire. Tom Cook, John Dalglish's number two man for years, became managing director with David Borthwick as treasurer, Wallace Cunningham as chief engineer and Bob MacGrown as general superintendent.

In early 1966, Proctor Silex merged into SCM Corporation on the basis of three shares for one. The original P&S holding 1,650,000 shares (disregarding Silex and Proctor Electric minority) then equalled 550,000 shares of SCM. The transfer ratio of 3:1, before rumors of fabulous things to come, forced both stocks to ridiculous levels. Compared to net worth of nineteen dollars per share and stock quote of eighteen dollars, the market jumped to ninety-two dollars in six months, while SCM was one of the very most active on the board. The spiral proved to be entirely unrealistic. Since the inflated prices bore absolutely no relation to earnings, the stock slowly slid back to fifteen where it is forty per cent below book value. The quote, equivalent to five on Proctor Silex, represents exactly their book value ten years ago. Immediately after the merger, P&S was detached from Proctor Silex, who sold only consumer goods. It is interesting to compare P&S earnings with Appliance Division earnings:

	Av. Ship. '75-60	Av. Net '57-60	Av. Ship. '61-66	Av. Net '61-66
P&S	10 million	100 million	17 million	800
PE, Silex	22 million	250 million	32 million	600

Following the merger P&S operations were separated completely from the Appliance Division. At 20 million consolidated shipments, the net before taxes has been averaging $950 million per year. Operations since 1966 have been relatively stable. By and large, dryer and parts orders have been profitable but the textile line hovers around zero net. There have been few breakthroughs of major innovations, but neither has there been drastic losses. Traps, the Proctor anti-pollution project is still in the future. L&S the only P&S addition of any consequence remains at a million dollar a year program, with Kay's son James in charge. At executive level, the only change is the replacement of Howard Horn as treasurer.

Proctor and Schwartz today is strong and exhibits great resistance to erosion. The real problem is to maintain the expertise they once showed to develop into new lines.

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