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RASKOB QUITS POST IN GENERAL MOTORS TO APPEASE CRITICS Publication: The New York Times Date: 25 July 1928 Topics: General Motors, John Raskob |
The resignation of John J. Raskob, who recently became Chairman of the Democratic National Committee, as Chairman of the Finance Committee of the General Motors Corporation, as a member of that committee and as a member of the executive committee, was announced yesterday by Alfred P. Sloan Jr., its President.
Mr. Raskob retained his posts as a Vice President and a director of the corporation, and at present, it was said, has no intention of resigning these places. According to Wall Street information, however, he later may find it advisable to sever all connection with the General Motors Corporation during the Presidential campaign.
The resignation of Mr. Raskob as an executive of the General Motors Corporation came as a surprise to the public and his associates in the campaign to elect Governor Smith President, but not to those associated with him in business. Immediately after his election as Democratic National Chairman, criticism of his acceptance of the position and his retention of his General Motors posts was said to have been made by some of his colleagues on the General Motors directorate and, according to a dispatch from Detroit, this led to a discussion of the advisability of his resignation as Finance Committee head by some of his associate directors.
Charles T. and Fred J. Fisher, Vice Presidents of the General Motors Corporation; Lawrence P. Fisher, President of the Cadillac Motor Corporation, and William A. Fisher, President of the Fisher Body Corporation, all of whom are General Motors Corporation directors, are understood to be ardent supporters of Herbert Hoover, Republican nominee for President. They and other directors were said to have objected to a situation which they believed might make it appear that the corporation was back of Governor Smith's candidacy for President. Members of some of the banking groups in General Motors were said to have expressed agreement with the view that Mr. Raskob should retire from his duties in the active management of the corporation during the campaign. George F. Baker Jr. of the First National Bank, Seward Prosser of the Bankers Trust Company and Junius S. Morgan Jr. and George Whitney of J. P. Morgan & Co. have been associated with Mr. Raskob on the General Motors Finance Committee.
Mr. Raskob originally intended to continue as the General Motors financial head. This was evident when he insisted upon his headquarters of the Democratic National Committee being located in the General Motors Building at 1,775 Broadway, so that he could work at both jobs. This headquarters, incidentally, is to be opened today.
More recently, Mr. Raskob, it was said, became convinced that his original plan of trying to function both as Democratic National Chairman and as General Motors financial head was inadvisable. In his letter of resignation to Mr. Sloan, Mr. Raskob gave as his reasons the discovery that the duties of National Chairman would require all his time and his desire that the public should not be under the misapprehension that the General Motors Corporation was in politics.
In his reply accepting the resignation, Mr. Sloan agreed with the advisability of avoiding any public belief that the corporation was in politics. Mr. Sloan added that every officer, employe, stockholder and dealer was, of course, free to take an individual stand on political questions. This reference to dealers in Mr. Sloan's letter was taken to confirm in part the report that many General Motors dealers had made inquiries as to whether they were expected to aid in the campaign to elect Governor Smith.
Mr. Sloan added that Mr. Raskob's resignation was accepted with regret but that it was for the best interests of both Mr. Raskob and the corporation. He expressed the hope that Mr. Raskob would resume his duties as finance committee Chairman after the Presidential campaign.
News of Mr. Raskob's resignation was made public at the General Motors Corporation offices. A statement by Mr. Sloan reads:
“The resignation of John J. Raskob, Chairman of our finance committee, has been under consideration and, it being to the interest of both the corporation and Mr. Raskob to accept same, this has been done with the greatest regret on the part of the entire organization. The attached correspondence states the facts in the case.”
Mr. Raskob's letter, which was dated Friday, follows:
July 23, 1928.
Alfred P. Sloan Jr., President, General Motors Corporation, New York, N. Y.
Dear Alfred:
I am tendering you herewith my resignation as Chairman of our Finance Committee, as a member thereof and as a member of the Executive Committee, effective as of the date hereof.
In the first place, I find that the duties imposed upon me as Chairman of the National Democratic Committee are such as to take all of my time and effort during the ensuing Presidential campaign. Moreover, it is desirable for the public to know, as everybody in General Motors should appreciate, that the corporation is not, and in the nature of things cannot be, in politics. While all of its officers and employes are, of course, entitled to their individual political views, the corporation must not be put in the light of taking sides for or against political parties, personages or questions.
Lest, therefore, there should be the slightest misapprehension in the public mind on this score, and in order to enable me to devote all of my energies free from any restraint to the very arduous political duty which I have assumed, I am asking to be relieved of all my duties in connection with the corporation's affairs.
Sincerely yours,
JOHN J. RASKOB.
Mr. Sloan's reply follows:
July 24, 1928.
Mr. John J. Raskob, General Motors Corporation, New York, N. Y.
Dear John:
I beg to acknowledge receipt of yours of July 23 tendering your resignation as Chairman of our Finance Committee, as a member thereof and as a member of the Executive Committee.
In view of your conviction that your duty as Chairman of the Democratic National Committee will monopolize your time during the Presidential campaign and on account of the importance to the corporation as well as to yourself of making it unmistakably clear that the corporation takes no part in political affairs, we are constrained to accept your request to be relieved from all your duties in connection with the corporation.
It is the unanimously expressed hope and expectation that you will resume your duties after the Presidential campaign is over. On our part as a corporation we recognize the necessity of always keeping clear of politics, which is no concern of ours, at the same time recognizing to the full the right of all of our officers, employes, dealers and stockholders to take their individual stand on political questions as they think best.
Sincerely yours,
ALFRED P. SLOAN Jr.
Mr. Raskob was not reached yesterday at his office at the General Motors Building. He did not appear at the Democratic National Headquarters, whic hwas still located at the Biltmore Hotel, although he had been expected there to deal with a specific matter.
At his office in the General Motors Building it was said that all information concerning Mr. Raskob's resignation would come from Mr. Sloan and that Mr. Raskob, even if he were present, would not answer a question as to whether or not his resignation had been forced.
There was a difference of opinion at the Democratic National Headquarters as to whether Mr. Raskob's resignation from active management would help or hurt Governor Smith. It was agreed that it might hurt by producing the impression that “big business” was so little satisfied with Governor Smith as a candidate that it had insisted upon Mr. Raskob, the Governor's campaign manager, retiring from General Motors. Creation of the impression that Governor Smith, if elected President, would be safe for business, is understood to have been the chief reason for Governor Smith's selection of Mr. Raskob as National Chairman. On the other hand, it was contended by friends of the Governor that Mr. Raskob now would be free to devote all his time and energy to the campaign, and the feeling among them was quite general, that the incident, if it did not help Governor Smith's cause, would not hurt very much.
The information in Wall Street was that Mr. Raskob decided on his resignation several days ago after discussions with associates in General Motors extending several days. Mr. Raskob and his associates had heard, it is understood, that there was some criticism of his connection with the Democratic campaign while he continued to head the Finance Committee. This criticism, most of it of the whispered variety, appeared in Wall Street soon after Mr. Raskob became Chairman.
It was said in Wall Street that Mr. Raskob as one of the largest stockholders in General Motors, made the final decision in the matter and did it willingly and without any outside pressure.
For the time being, it is understood, Donaldson Brown, Vice President in charge of finance and a member of the Finance and Executive committees, will take over most of Mr. Raskob's work. At the General Motors offices yesterday it was said that the Finance Committee had not chosen a successor to Mr. Raskob and it was not known when that action would be taken. It was reported that Mr. Brown would serve as Acting Chairman and that the permanent chairmanship would remain open until Mr. Raskob's return.
It was widely reported that Mr. Raskob was liquidating some of his stock holdings in General Motors, but these reports were not confirmed. Financial interests did not credit the story and ascribed it to bear traders seeking to depress the stock. General Motors was heavy on the Stock Exchange yesterday, falling from the high of 187½, at which it opened, to a low of 184⅝, and closing at 185⅞, with a net loss of 1½ points. The weakness was attributed in some quarters to Mr. Raskob's resignation.
The extent of Mr. Raskob's holdings in General Motors never has been disclosed, but he is known to be one of the largest individual holders of the stock. The du Pont interests, with whom he has been closely associated for years, virtually control the corporation through the ownership of about 25 per cent. of its common stock. This is the largest amount of stock held by any one group. Mr. Raskob is looked upon as the du Pont representative in the General Motors organization.
Mr. Raskob also is a large stockholder in a number of other enterprises, among them the United States Steel Corporation. It has been reported at various times that he was to be elected a director of United States Steel. Some time ago Mr. Raskob was elected a director of the American International Corporation, one of the largest holders of securities in the country.
In Wall Street Mr. Raskob has been regarded as the spokesman of General Motors on financial matters. His public statements on a number of occasions have stimulated buying enthusiasm in General Motors shares. The most recent instance of this was in March when, upon sailing for Europe, a statement by him was interpreted to mean that General Motors common should sell at “fifteen times its earnings.” His remarks at that time started a lively demonstration in General Motors that spread to other departments of the market.